Bloomberg News

Credit Suisse Banker Fined Over Bond Offering ‘Charades’

March 13, 2012

A Credit Suisse Group AG (CSGN) banker in London, Nicholas Kyprios, was fined 210,000 pounds ($330,000) for disclosing confidential client information to a fund manager in a what regulators called a “guessing game.”

Kyprios, head of European credit sales at the bank, indicated to the manager that the bank’s client Liberty Global Inc. (LBTYA) was close to issuing bonds to finance its acquisition of German cable company UnityMedia GmbH, after the manager told Kyprios he didn’t want information he couldn’t act on, the Financial Services Authority said in a statement today.

Credit Suisse was working for Liberty on the takeover and also served as lead book runner for the 2.5 billion-euro ($3.3 billion) bond issue to partly finance the deal. In response to questions during a November 2009 call about who was issuing the bonds, Kyprios told the manager they could “play this game” and “you’re going to be my charades partner.” Kyprios ruled out possible issuers and signaled confirmation when the manager, who the FSA didn’t identify, guessed UnityMedia.

The case is the second time this year the FSA levied a fine for disclosing inside information to a person who said they didn’t want to be wall-crossed, or provided information with the understanding they wouldn’t act on it. Andrew Osborne, a former corporate broker at Bank of America Corp.’s Merrill Lynch, was fined 350,000 pounds last month for telling Greenlight Capital Inc. Chairman David Einhorn about a planned equity sale by Punch Taverns Plc. (PUB) Einhorn and Greenlight were fined 7.2 million pounds in January for trading on the information.

Financial Penalty

Credit Suisse “deeply regrets” that one of its employees has been sanctioned by the FSA, the Zurich-based bank said in a statement. It “fully supports the FSA’s actions to ensure information is properly controlled and has reinforced the FSA’s decision by imposing its own financial penalty” on Kyprios.

Kyprios also disclosed inside information about the bond sale to a second fund manager in Germany by telling him that he knew the management of the potential issuer. When the second fund manager asked if the issuer was German, Kyprios told him, “you’re a smart man,” according to FSA documents.

He made the comments to both fund managers while sitting in an open plan area at the bank, in earshot of Credit Suisse traders and 26 employees who reported to him, the agency said.

When questioned by the regulator, Kyprios told them the conversations were “banter” that didn’t disclose any actionable information. He was fined for improper market conduct and received the FSA’s standard 30 percent discount on the fine for settling early.

“Kyprios’ conduct in trying to push to the limit what he could say resulted in him crossing the line,” said Tracey McDermott, the acting head of enforcement at the FSA. “His behavior was well below the standards we expect of senior market professionals.”

Kyprios, who still works at the bank, didn’t immediately respond to an e-mail request for comment.

To contact the reporter on this story: Lindsay Fortado in London at lfortado@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net


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