UBS Settles Suit With Trader It Fired Over a $500,000 Loss
(Bloomberg) -- UBS AG settled a lawsuit with one of its former credit traders after he was fired for gross misconduct for running a short position on 195 million euros ($225 million) in German government bonds.
Thomas Gamby, who worked at UBS in London for nearly 10 years, sued the Swiss lender for breach of contract earlier this year. Before the settlement, he sought his compensation because UBS’s alleged breach “prejudiced him in the work market, preventing him from obtaining equally remunerative employment,” according to his suit. The settlement figure has not been made public.
His dismissal centered on two trades in January 2020.
The first was the “unusually large” short position on the bunds, which exposed UBS “to significant and unmanaged risk” according to the bank’s defense. Gamby entered the transaction by placing a total of 13 trades, each of 15 million euros, which resulted in a $500,000 loss for UBS, the bank’s lawyers said.
Later that day, UBS says Gamby sold a position in a corporate bond worth 1 million pounds. After close of business, UBS says he repriced the bond on the bank’s system, effectively removing the losses showing on his profit and loss account and creating a small trading profit of around $86,000 for the day. He was suspended by the bank five days later.
Gamby’s lawyers declined to comment. In his suit, his lawyers said he was not guilty of gross misconduct.
They argued he had only intended to trade 50 million bunds and that the other trades must have been caused by keying errors or a system error. They also say Gamby amended the price of the bond to stop it being traded again, because the bond caused the bank administrative difficulties. The changing of the price didn’t match the losses on the German bund trades, so while it showed a gain on his new business account, the overall profit and loss account was not affected, they said.
UBS didn’t respond to requests for comment.
Gamby accused the bank of commencing the investigation and his subsequent suspension in order to replace him with another trader. His lawyers also alleged UBS withheld the interview records of his line managers that showed they accepted his version of events from the disciplinary panel. His lawyers also said the bank breached his contract by not paying him his bonus for 2019.
UBS said Gamby’s suspension was unconnected to the appointment, denied his characterization of the interview records but did accept they were withheld.
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