Who is Sachin Karpe?

British newspaper The Times yesterday profiled Sachin Karpe as using a mix of charm and aggression in his rogue trades. Karpe’s challenge of a fine by British regulator Financial Services Authority (FSA) began in the courts on December 12, leading to the regulator naming Anil Ambani’s family as behind a request to open an illegal offshore fund, according to a Financial Times report.

Karpe was fired from his post overseeing Indian clients on London’s Asia-II desk in Swiss Bank UBS in 2008. He was accused of moving money between client accounts to hide losses from unauthorised foreign-exchange trades and helping a client use an offshore investment fund in violation of Indian law.

 

A lawyer for FSA told a tribunal on Tuesday this client was Anil Ambani’s family. “The source of funds…was plainly the Ambani family,” the Financial Times quoted the lawyer for FSA as stating.

‘Golden Boy’
Karpe has accepted a lifetime ban from working in Britain’s financial services industry, his lawyer told the tribunal. But he is fighting a £1.25-million (Rs 10.5 crore) fine, one of the highest individual fines imposed by the regulator, which Karpe’s lawyer said will make him bankrupt. Karpe’s defence is that UBS “was to some extent complicit” in his unauthorised trades because “senior managers” were copied on e-mails about some client accounts, reported Bloomberg.

“He did not circumvent controls because there were none in place,” said Karpe’s lawyer Michael Blair. “If there were no rules, he could not have been proved to be doing anything wrong.”

The Times profile is culled from these court proceedings. “Karpe was the "golden boy" whose methods were a model for the rest of the bank, a tribunal heard,” reported The Times of UK as quoted by The Australian.

Only an enabler
Karpe’s lawyer argued that “(Ambani) asked for a transaction and Sachin Karpe enabled it”. “There was no suggestion the client himself was damaged. The most that can be thrown at Karpe’s door was he probably ought to have told the client the bank would not deal because the transaction was not legal in India,” FT reported on the court proceedings.

On Wednesday, a Reliance Group spokesperson had said the case was five years old and had been settled at the Securities and Exchange Board of India through a consent mechanism in January. The group was neither a party nor represented in the FSA case, the spokesperson said.

The FSA said Karpe’s wrongdoings were discovered after a UBS whistle-blower reported a transfer from a customer account to his personal account in 2007. The review led to Karpe's dismissal in the early 2008.