Hong Kong authorities have banned a former Credit Suisse trader in Hong Kong from ever working in the industry again because of attempts to cover up trading losses. The misconduct had prompted the Swiss bank to downwardly adjust profit figures.

A Hong Kong financial regulator has banned a former Credit Suisse trader in Hong Kong from ever working in the industry again because of attempts to cover up trading losses. The misconduct had prompted the Swiss bank to downwardly adjust profit figures.

The Securities and Futures Commission banned Jagjit Singh Dhillon, a former trader at Credit Suisse Securities (Hong Kong) and Credit Suisse (Hong Kong) from re-entering the industry “over improper activities in two principal trading books for which he had responsibility”, according to a statement on the SFC’s website.

“The disciplinary action follows an SFC investigation which found that Dhillon, who was responsible for trading equity derivatives, took various steps to cover up the losses and the real level of risk exposure in his trading books between 8 and 17 May 2012, including booking fictitious trades and entering incorrect market data in the trading books,” it said.

Credit Suisse later emailed this statement to this publication: “Credit Suisse has fully cooperated with the authorities in Hong Kong since identifying this incident in May 2012 and promptly reporting it to the relevant regulatory authorities.”

The regulator said Dhillon’s conduct led to an overstatement in the level of profits and an understatement in the level of risk exposure in his trading books, resulting in Credit Suisse having to make negative adjustments of 45.4 million to the cumulative monthly profit and loss figures for its trading books on 18 May 2012, and recalculate the level of risk exposure recorded in its risk management systems.

Dhillon also provided his supervisors with false information when they first became suspicious of the activities in his trading books, the statement continued.

“In deciding the disciplinary action, the SFC has taken into account all relevant circumstances including that Dhillon’s conduct was intentional, dishonest and serious.  The dishonest nature of his conduct demonstrates that he presents a serious risk to confidence in the financial market,” it said.

The regulator said Dhillon had been licensed under the Securities and Futures Ordinance to carry on Type 1 (dealing in securities), Type 2 (dealing in futures contracts) and Type 7 (providing automated trading services) regulated activities.  His licence was revoked when he left Credit Suisse on 9 June 2012.

The SFC contacted police about the matter in June 2012; he was arrested and charged. Holding charges were subsequently withdrawn in May 2013 due to lack of co-operation of key witnesses and Dhilon left Hong Kong immediately.