SINGAPORE (Reuters) - Two former UBS AG traders in Singapore are suing the bank for wrongful dismissal, saying the bank fired them to lessen its role in the alleged manipulation of reference rates used to price currency derivatives known as non-deliverable forwards.
In separate lawsuits filed at Singapore’s High Court on Wednesday, Mukesh Kumar Chhaganlal and Prashan Parmeshwar Sunny Miripuri said UBS UBSN.VX never gave them full details of what they were alleged to have done wrong. UBS declined to comment.
UBS was fined $1.5 billion in December last year for its role in a multi-year scheme to manipulate the London interbank offered rate (Libor) and other benchmark interest rates.
“It appears to the plaintiff that his summary termination was effected in order to mitigate the defendant’s (UBS) role in the growing scandal related to alleged fixing of reference rates in the Singapore market,” papers in Kumar’s case say.
Kumar, who was the former co-head of Macro Trading, Emerging Markets Asia, and Miripuri, who ran UBS’s South East Asian Desk for NDF trading, were both fired on February 7 having been suspended since last year.
Both men said in the papers that UBS never gave them full details of why they were being suspended and subsequently fired.
According to the court documents, the two former UBS traders were given letters by the bank on February 7 that said they were being terminated “on the ground of gross misconduct” with no further explanation.
“They were not presented with any evidence showing they fixed rates,” said Daniel Chia, a director at Stamford Law Corp., which is representing the traders. “UBS cannot pinpoint what they did wrong.”
A spokeswoman for UBS in Singapore said the bank is declining to comment on the case as the investigations into the alleged manipulation of reference rates are still ongoing. She added that the bank is co-operating fully with the authorities.
Kumar did not comment beyond what he said in the court documents when Reuters spoke to him via telephone.
Miripuri could not be immediately reached for comment.
Kumar is seeking damages including shares which would have been due to him under the bank’s equity ownership plan worth S$2.41 million ($1.95 million) at the time he was dismissed, as well as three months of salary in lieu of notice totaling S$150,000, according to the court papers.
Miripuri is claiming three months of salary, the balance of his performance incentive for 2012 that he said he was promised when he joined UBS at the start of that year which comes to S$484,966, and shares worth more than S$700,000 at the time of his dismissal, the documents he filed to the court show.
The Monetary Authority of Singapore (MAS) ordered banks that help set local interbank lending rates and NDF rates to review the fixing process last year as U.S. and British regulators cracked down on manipulation of Libor, a benchmark used to set interest rates for around $600 trillion worth of securities.
Kumar said in his suit that he voiced concerns about the regulation of reference rate setting in Singapore to his UBS manager Bala Venkatesan, the MAS, and the Association of Banks in Singapore (ABS) before the bank reviews began.
“The plaintiff felt there were insufficient checks and balances concerning the setting of reference rates by various international banks operating in Singapore,” his papers say.
During 2012, Kumar saw increasingly unrealistic rates for the Indonesian rupiah against the dollar being set in the market and brought this to Venkatesan’s attention “as evidence of the lack of regulation in the NDF market,” the papers say.
He said Venkatesan responded there was no way to “control the market or how people set the rates on the market.”
Vankatesan, who was head of Fixed Income, Commodities and Currencies for UBS in Asia but has since left the bank, declined to comment when contacted by Reuters.
An MAS spokesman told Reuters that it is not able to comment on ongoing legal proceedings, while ABS did not respond to requests for comment from Reuters.
NDFs are derivatives that let companies and investors hedge or speculate on emerging market currencies when exchange controls make it difficult for foreigners to participate directly in the spot market.
Spot reference rates submitted by lenders in Singapore to ABS are used to determine the settlement prices of NDF contracts in the Indonesian rupiah, Malaysian ringgit and Vietnamese dong.
Thomson Reuters, parent company of Reuters News, calculates and distributes the spot reference rates for the rupiah, ringgit and dong NDF markets on behalf of the ABS, as well as other interbank lending and currency rates.
Reporting by Rachel Armstrong; Editing by Ryan Woo