The FSA has fined Credit Suisse head of European credit sales Nicholas Kyprios £210,000 for improper market conduct and disclosing client confidential information.
Credit Suisse acted on behalf of Liberty Global, Inc. during its takeover of UnityMedia GmbH which was part-financed by a €2.5bn bond issue. So that he could market the bond to clients, on November 9, 2009, Kyprios was wall-crossed regarding the takeover and the proposed bond issue.
Wall-crossing allows companies to provide inside information to a third party to gauge interest for a proposed deal. Once someone agrees to be wall-crossed they can be provided with inside information but are restricted from trading or disclosing it until it is no longer inside information.
He was given confidential information by Credit Suisse, told that it was inside information and instructed in writing not to disclose it to third parties.
On November 11, 2009 Kyprios called a fund manager to invite him to the bond issue road show. The fund manager told Kyprios he did not want to be wall crossed. Although Kyprios did not have a pre-meditated intention to disclose the client confidential information, the fund manager asked Kyprios about the bond issue and in response Kyprios engaged in a guessing game, including advising when the fund manager was “getting warmer”.
Kyprios was an active participant in the guessing game and could have extracted himself before straying into dangerous territory but he did not do so.
As a result Kyprios signalled that UnityMedia was potentially about to bring a big bond issue to market and the issue was intended to be announced the next day.
He also disclosed the potential rating of the issue, that UnityMedia would redeem outstanding bonds, and the issue was related to a merger and acquisition.
FSA acting director of enforcement and financial crime Tracey McDermott says: “While the FSA accepts he did not set out to disclose the information, Kyprios’ conduct in trying to push to the limit what he could say resulted in him crossing the line.
“His behaviour was well below the standards we expect of senior market professionals who we should be able to rely on to uphold the system rather than seek to get round it. The high penalty reflects the seriousness of Kyprios’ breach.”