Following a hearing, the U.K.’s Upper Tribunal upheld a decision by the U.K.’s Financial Conduct Authority (FCA). That decision found that a private bank based in Luxembourg, Banque Havilland (now known as Rangecourt SA), breached FCA rules when, in 2017, a couple of its employees crafted a plan to devalue Qatar’s Riyal through manipulative trading strategies designed to break the currency’s peg to the U.S. dollar, and ultimately to harm the country’s economy.
At the time, Qatar was under economic sanctions from several countries, including the United Arab Emirates (UAE), and the FCA alleged that the plan — which was initially called the “setting fire to the neighbour’s house fund” — was reportedly drawn up to impress the UAE-based sovereign wealth fund, Mubadala Investment Co.
After the plan was leaked, the FCA brought enforcement action against the bank and several employees that, it alleged, were involved with drafting the proposed strategy.
The regulator’s findings in the enforcement case were appealed to the Upper Tribunal, which has now concluded that the bank, and the employees involved with coming up with the plan, breached the FCA’s principles.
The bank admitted two of the alleged breaches, but the tribunal concluded that “the bank’s failures go considerably beyond what is admitted” — and it found that the bank, its former CEO in London and another former employee “acted without integrity.”
“Both [former employees] were aware that the strategy being formulated was an improper strategy involving market manipulation to damage the economy of Qatar,” the tribunal said in its decision, adding that their conduct is also attributed to the bank “and it follows that the bank’s conduct lacked integrity.”
In setting sanctions, the tribunal said the misconduct was a “very serious” breach.
“The breach was deliberate and encouraged the commission of financial crime and market misconduct,” it said — and, while there was no evidence that the strategy was ever presented to Mubadala, or that the bank made any profit from it, the strategy “was intended to undermine the stability of the economy of a sovereign state risking significant harm to other market participants.”
The tribunal ordered a £4-million fine against the bank, £352,000 against the ex-CEO and £14,200 for the former employee. They were also both banned from working in financial services in the U.K.
The FCA had initially imposed a £10-million fine on the bank, but the tribunal agreed with the bank that the penalty was “arbitrary” and it ultimately settled on £4 million as the appropriate sanction.
A third employee, who was also subject to enforcement action by the FCA, didn’t appeal his penalty (a £54,000 fine) for his role in the misconduct.
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