Broker jailed 36 months for unauthorised trades that cost company millions

A 33-year-old broker was jailed 36 months for making unauthorised trades of crude oil futures, causing his employer to lose US$7.26 million (S$9 million).
A 33-year-old broker was jailed 36 months for making unauthorised trades of crude oil futures, causing his employer to lose US$7.26 million (S$9 million).PHOTO: ST GRAPHIC

SINGAPORE - A 33-year-old broker was jailed 36 months on Monday for making unauthorised trades of crude oil futures, which caused his employer to lose US$7.26 million (S$9 million).

The court heard that at about 4am on May 4, 2012, Chen Yue informed UOB Bullion and Futures (UOBBF), a wholly-owned subsidiary of UOB, that he had purchased 4,997 lots of NYMEX Light Sweet Crude Oil CLM2 futures contracts for a client.

The deal was completed the same day.

The client's account had a trading limit of 20 crude oil futures contracts, while UOBBF's brokerage account had a trading limit of 5,000 lots for crude oil futures.

Each lot represents 1,000 barrels of oil.

At about 8.45pm that night, Chen was interviewed by officers from UOBBF and UOB, but the Singapore permanent resident maintained that the trades were authorised by the client.

The next morning, however, the China national admitted to his employer that the trades were not authorised.

As a result of the unauthorised trades, UOBBF suffered a loss of US$7,285,910, or S$9,067,315, based on the exchange rate at the time of the offence.

For deceiving a futures broker in connection with the trading of futures contracts, Chen could have been fined a maximum of $250,000 and jailed up to seven years under the Securities and Futures Act.