The United States Commodity Futures Trading Commission (CFTC) has brought charges against John Patrick Gorman III, the former Head of non-yen rate trading at Nomura, for manipulating the prices of an interest rate swap.
Announced on Monday, the charges by the watchdog highlighted that Gorman manipulated the prices knowingly to benefit the bank and later produced false statements to the CFTC investigators during an investigation and further destroyed relevant communications.
The lawsuit filed in the Manhattan district court did not name Nomura, but a Bloomberg report confirmed that Gorman is still employed by the Japanese trader but not as a trader.
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The CFTC detailed that on February 3, 2015, Gorman was handling the business with a bond issuer, whose bond issuer entered into a rate swap transaction with a Nomura affiliate, involving a US dollar interest rate swap spreads with a 10-year maturity.
Gorman, who is now stationed in the UK but previously in Japan, deliberately entered a trade to move the price of the bond which will in turn book more profits for Nomura. Though the bond issuer was informed about the price, he did not know that Gorman was trading against himself.
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The US regulator further pointed out the manipulative nature of Gorman, who also boasted his ability to execute trades at lower levels.
Commenting on the case, Vincent McGonagle, CFTC’s acting Director of Enforcement, said: “Manipulative and deceptive conduct on swap execution facilities and in the swaps markets harms their integrity and market participants, and we will take action to hold those who commit this type of misconduct accountable.”
“Further, the Commission will seek to hold accountable individuals who make false statements in our investigations.”
However, Gorman denied all allegations of misconduct against him through a statement by his lawyer.