Serious Sinkie forex traders jailed for making US$1 billion of fake trades for own profit

http://www.straitstimes.com/business/former-deutsche-bank-hsbc-traders-jailed-for-cheating-employers

Former HSBC senior dealer Ivan Chng Kian Wee, 48, was jailed 15 weeks while former Deutsche Bank spot trader Toh Hway Khuan, 51, was jailed eight weeks.PHOTOS: AFP, REUTERS


Published2 hours ago

Updated2 hours ago


Selina Lum


SINGAPORE - Two former foreign exchange (forex) traders who used the names of family members to set up trading accounts, which were then used to cheat their respective banks with bogus trades, were on Wednesday (Feb 22) sentenced to jail .

Former HSBC senior dealer Ivan Chng Kian Wee, 48, was jailed 15 weeks while former Deutsche Bank spot trader Toh Hway Khuan, 51, was jailed eight weeks.

Prosecutors had sought six months for Chng and three months for Toh while their lawyers had asked for a fine.


Justice See Kee Oon said that deterrent sentences were justified but noted that there was no erosion of confidence in the two banks and that the offences of the two men had no discernible impact on the market.

In January, they had pleaded guilty to using their respective banks' accounts to get favourable rates on the US dollar on their own personal trades.


Both cases are unrelated. The trades involved took place in November 2009.

Chng had bought and sold US$778 million, making about S$230,000 in wrongful gains. Toh carried out trades amounting to US$257 million and made about S$140,000 in wrongful gains.

In the case of Chng, he had opened a trading account with now-defunct brokerage MF Global in June 2006 using the name of his wife.

He would place his personal orders using this account, instructing his broker on the exchange rate and quantity of currency he wanted to buy or sell. He would always give a rate that was more favourable than the prevailing market rates.

After the order was accepted, Chng would use HSBC's proprietary account - used to trade on behalf of the bank and its customers - to enter an opposite order at a similar rate and quantity to match his personal order.

Toh used a similar modus operandi, using an account he set up with MF Global in November 2006 in the names of his brother and sister-in-law.

By using their banks' accounts to carry out matching trades for their own benefit, the two men admitted they had engaged in acts of deception on their respective employers.

I bet if you asked this reporter to explain how they made the gains, she would not be able to explain.

Too many sinkie criminals indeed. Go big or go home. Such "unlawful gains" are chump change.

never mention who their client?temasek holdings?

They saw a low-risk opportunity and took it to commit the crime, taking a little spread per trade - hence the gain of just S$370,000 on more than US$1 billion of fake trades.

Unfortunately for them, while MAS was investigating banks' currency and interest rate rigging during the period of the financial crisis, a much bigger systemic issue, all their chat logs and trading logs came up.

this is not the end, i can assure you! there are many big banks doing it, stay out of forex if you dun want to lose money.

scroobal said:

I bet if you asked this reporter to explain how they made the gains, she would not be able to explain.

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What the 2 chaps did is call "front running" - assuming its a case of buy low and sell high.

krafty said:

this is not the end, i can assure you! there are many big banks doing it, stay out of forex if you dun want to lose money.

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Hope MAS will more . Its akin to a casino dealer doing "hanky panky" at table games.

scroobal said:

I bet if you asked this reporter to explain how they made the gains, she would not be able to explain.

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There is a very small difference between the rates available to bank employees and the general public in forex. Very small indeed. That is why to gain from it the culprits must trade in the hundreds of millions. It is there staring at us and the temptation is great especially when we are squeezed for $$$$. These two are the ones getting caught .. tip of the iceberg.

Reddog said:

There is a very small difference between the rates available to bank employees and the general public in forex. Very small indeed. That is why to gain from it the culprits must trade in the hundreds of millions. It is there staring at us and the temptation is great especially when we are squeezed for $$$$. These two are the ones getting caught .. tip of the iceberg.

Click to expand...

if u are risking 1 billion or 744 million dollars i would say u deserve the different rate.i think theres no such thing as a free lunch in this world.....if u are risking a billion even for just one second on the market,if things go south just a microscopic bit he will be royally screwed.....its like trading with extreme leverage....in this case borrowing 1 billion leverage he doesnt own.

there is only a way to make money from forex but i am not going to disclose here. cos' if i do, the sharks might change how the game is played.

my last broker told me that the traders at the brokerages can see your trades and bet according to it.

so the problem i am facing is that i dun trust all these brokerages and banks. if i want to trade, i go straight to a money changer.:o

Reddog said:

There is a very small difference between the rates available to bank employees and the general public in forex. Very small indeed. That is why to gain from it the culprits must trade in the hundreds of millions. It is there staring at us and the temptation is great especially when we are squeezed for $$$$. These two are the ones getting caught .. tip of the iceberg.

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You seem to work understand it works. Do you mind enlightening some of us who are not familiar with the workings of forex?

Based on the great journalistic exposition of ST reporter, it seems that the HSBC dealer used the wife's account to buy low and sell high while he would use HSBC official account to sell low and buy high on the same transaction. If that is the case, why is the transaction classified as fake ? Did he use HSBC money to buy high from his wife ?

krafty said:

there is only a way to make money from forex but i am not going to disclose here. cos' if i do, the sharks might change how the game is played.

my last broker told me that the traders at the brokerages can see your trades and bet according to it.

so the problem i am facing is that i dun trust all these brokerages and banks. if i want to trade, i go straight to a money changer.:o

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Shut your cock stories.

Ralders said:

Shut your cock stories.

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in the good old days 1990s -2000s (dont know about now because all trades
are online ) forex orders/trades are done via the phone.

just like private 4d collections.

the brokers who take calls at those time "eat" all your trades and never

really execute them. In other words, the broking house "gamble" with you.


the broking house know that you are a new kid so they can "gamble" with you.


But if you are a Mr Oei Hong Leong ( big whale ) they ( eg CitiBank ) may be

very very careful.

krafty said:

there is only a way to make money from forex but i am not going to disclose here. cos' if i do, the sharks might change how the game is played.

my last broker told me that the traders at the brokerages can see your trades and bet according to it.

so the problem i am facing is that i dun trust all these brokerages and banks. if i want to trade, i go straight to a money changer.:o

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MAS should step up its control on all these errant broking houses.

Former Deutsche Bank, HSBC traders here jailed for cheating



Duo first to be convicted under the Securities and Futures Act relating to fraudulent forex trades


ST



Feb 23, 2017 06:00 am

Two former foreign exchange (forex) traders who used the names of family members to set up trading accounts to cheat their respective banks with bogus US dollar trades were yesterday sentenced to jail.


Former HSBC senior dealer Ivan Chng Kian Wee, 48, was jailed 15 weeks while former Deutsche Bank spot trader Toh Hway Khuan, 51, was jailed eight weeks.

The pair, who had pleaded guilty in January, are the first to be convicted of offences under the Securities and Futures Act relating to fraudulent forex trades.


The two cases are unrelated but both men used the same method - using their respective banks' accounts to trade with themselves, at rates favourable to themselves.

It meant they bought currency at a rate that was lower than the prevailing rate or sold currency at a rate that was higher than the prevailing rate.

In November 2009, Chng made wrongful gains of about $230,000 from 149 trades with a total transactional value of US$778 million.

In the same month, Toh carried out 39 trades amounting to US$257 million and made about $140,000 in wrongful gains.

Chng had opened an account with now-defunct brokerage MF Global in June 2006 in his wife's name.

He placed his personal orders using this account, instructing his broker on the exchange rate and quantity of currency he wanted to buy or sell.

After the orders were accepted, Chng used HSBC's account to enter an opposite order at a similar rate and quantity to match his personal order.

Toh used a similar modus operandi with an account he set up, also at MF Global, in November 2006 - using the names of his brother and sister-in-law.

Chng and Toh did not disclose these accounts to their employers, even though internal rules required them to obtain prior approval for personal trading accounts, said Deputy Public Prosecutor Muhamad Imaduddien.

Toh's lawyer, Mr Lee Teck Leng, said his client has issued a cheque to the Accountant-General to disgorge his wrongful gains. Chng had to work as an Uber driver after being fired from HSBC, said his lawyer Thong Chee Kun.

What is front running ?

This is an unethical practice whereby someone with advance knowledge of a specific market order in, say, shares, bonds or a currency from a client steps in ahead and buys for their own account. When the client’s usually much larger order is executed and drives up the price, the private purchase can be sold at a profit.

https://www.ft.com/content/9a09df46-4f18-11e6-88c5-db83e98a590a

Reddog said:

There is a very small difference between the rates available to bank employees and the general public in forex. Very small indeed. That is why to gain from it the culprits must trade in the hundreds of millions. It is there staring at us and the temptation is great especially when we are squeezed for $$$$. These two are the ones getting caught .. tip of the iceberg.

Click to expand...

I would say what they did were similar to exploiting an arbitrage opportunity. And it's isn't totally risk free either.

Narong Wongwan said:

I would say what they did were similar to exploiting an arbitrage opportunity. And it's isn't totally risk free either.

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Lack of oversight- just look at 1995 collasoed of barings bank under trader nick leeson in sgp.

look what happen early this month,

FXCM banned by CFTC after taking positions against clients

WASHINGTON (MarketWatch) -- FXCM has been banned from operating in the U.S. after the Commodity Futures Trading Commission found the retail currency broker had an undisclosed interest in the market maker that consistently "won" the largest share of FXCM's trading volume - and thus was taking positions opposite its retail customers. The CFTC also found that FXCM willfully made false statements to the National Futures Association in order to conceal FXCM's role in the creation of its principal market maker as well as the fact that the market maker's owner had been an FXCM employee and managing director. FXCM also agreed to pay a $7 million fine and never seek to register with the CFTC, and the two founding partners, Dror Niv and William Ahdout, will withdraw from CFTC registration. FXCM, Niv and Ahdout didn't admit or deny the findings.

http://www.marketwatch.com/story/fx...r-taking-positions-against-clients-2017-02-06


do you all really think that they are the only one?