Neil Phillips, Co-Founder and Co-Chief Investment Officer of Glen Point Capital Advisors LP and Glen Point Capital LLP, has been accused of currency manipulation in a civil enforcement action filed by the Commodity Futures Trading Commission (CFTC) in the U.S. District Court for the Southern District of New York on December 15, 2022. Phillips, along with the two companies, are charged with a deceptive scheme to illegally trigger payouts on binary option contracts.
The CFTC alleges that the scheme involved manipulating the U.S. dollar (USD) to South African rand (ZAR) exchange rate in December 2017. Phillips intentionally drove down the exchange rate during a period of low liquidity to trigger payouts totaling $30 million to commodity pools managed by Glen Point Capital. The option contracts, considered swaps under the Commodity Exchange Act (CEA), would have expired worthless had the exchange rate not breached predetermined levels.
According to the complaint, Phillips orchestrated massive trades in the USD/ZAR currency pair, specifically targeting the 12.50 rand per dollar barrier level. Communications revealed Phillips explicitly told a salesperson at the bank executing the trades his objective was to trade *through* that rate, repeatedly asking how much volume was needed to move the market. Once the rate fell below the barrier, Phillips halted trading and requested confirmation of the breach.
The CFTC is seeking civil monetary penalties, disgorgement of ill-gotten gains, permanent trading and registration bans, and a permanent injunction against further violations of the CEA. Glen Point Capital is also accused of failing to adequately supervise the trading activities of its officers and employees. Acting Director of Enforcement Gretchen Lowe stated the agency will hold those committing manipulative conduct accountable to protect market integrity.
The case is ongoing, and the defendants have not yet responded to the allegations. The CFTC’s complaint details specific instances of Phillips’ manipulative intent and actions, painting a picture of calculated intervention in the foreign exchange market to profit from the binary option contracts.
Source: CFTC.gov
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