Release Number 8099-19

December 20, 2019

CFTC Charges Executive at Global Investment Bank with Manipulation and Fraud in Connection with Swaps Related to a Bond Issuance

Washington, DC — The U.S. Commodity Futures Trading Commission today filed a civil enforcement action in the U.S. District Court for the Southern District of New York against Christophe Rivoire, a French national, charging him with engaging in a deceptive scheme to manipulate the pricing of an interest rate swap between a bond issuer and a global investment bank. Rivoire was employed as the Head of North American Rates in the New York office of the bank.

“Combating manipulative and deceptive conduct in the swaps markets is crucial to our agency’s mission to preserve market integrity and to protect market participants,” said CFTC Director of Enforcement James McDonald. “We will continue to vigorously pursue all forms of misconduct in the swaps markets, including misconduct related to swaps with bond issuers like that alleged here.”

The complaint alleges that in June and July 2012, Rivoire knew that a bond issuer had negotiated with the bank to price a bond issuance and a related swap using specific screens displaying prices from an interdealer broker firm, including prices for U.S. dollar interest rate basis swaps with a five-year maturity (five-year basis swaps). Rivoire knew that the swap would be more profitable to the bank if lower prices for five-year basis swaps were displayed on the broker screens during the pricing of the bond issuance and the swap.

As further alleged, to effectuate the scheme to maximize the bank’s profit at the issuer’s expense by manipulating the prices of five-year basis swaps, Rivoire enlisted a trader under his supervision and explicitly directed the trader to “push the screen as much as we can before the pricing” of the swap with the issuer. This meant trading in a manner that would result in a lower price for five-year basis swaps. The complaint alleges that the trader followed Rivoire’s direction. As a result of Rivoire’s direction, the trader also enlisted the help of a broker at the interdealer broker firm, including telling the broker in advance that the trader needed to move prices on the screens.  During the pricing of the swap, Rivoire directed the trader when to sell a large quantity of swaps to manipulate the prices on the broker screens.

Without disclosing his directions to the trader or their conduct prior to the final pricing of the swap, Rivoire falsely or misleadingly told the issuer, “Obviously we are not controlling the screen.” The complaint alleges that the scheme had the effect of moving prices on the broker screens and, because the manipulated prices were used to price the swap, it resulted in a more profitable transaction for the bank and a less profitable transaction for the issuer. This conduct deceived the bond issuer and other market participants.

In its continuing civil litigation, the CFTC seeks, among other relief, civil monetary penalties, disgorgement, restitution, trading bans, and a permanent injunction against future violations of the federal commodities laws, as charged.

The CFTC thanks and acknowledges the assistance of the United Kingdom Financial Conduct Authority and the Ontario Securities Commission. 

The Division of Enforcement staff members responsible for this case are Gabriella Geanuleas, James Wheaton, Trevor Kokal, Candice Aloisi, Stephen Painter, Jr., Lenel Hickson, Jr., and Manal M. Sultan. In addition, the following DOE staff assisted in this case:  Elise Kent Bernanke, Alejandra de Urioste, Jennifer Diamond, Gates Hurand, Mary Lutz, and Elizabeth Padgett.