Britain’s Financial Services Authority has banned and fined Toronto-Dominion Bank’s former head of European credit products for mismarking trading positions.

The regulator said Thursday that it has banned Nabeel Naqui, the former head of the credit products group Europe and Asia Pacific at TD, and fined him £750,000 for “deliberately mismarking his trading positions and misleading fellow staff to conceal his losses over a period of two years”.

The FSA says that between July 2006 and June 2008, when Naqui was responsible for trading credit default index and tranche products, he “persistently mismarked his trading book in order to overstate his performance and took steps to ensure that this was not detected, providing deliberately altered quotes to those conducting an independent valuation of Toronto Dominion’s trading positions.” This took place even as the FSA was sanctioning another former TD trader for similar conduct, and continued even after that trader was sanctioned.

The mismarking was uncovered after Naqui left the firm and his book was handed to another trader. As a result, his book was marked down by $96 million (£48 million). TD was fined £7 million for repeated systems and controls failings in relation to this case, it says.

“Market professionals cannot resort to mismarking in any circumstances. Naqui was a senior and experienced trader. Confidence in the financial system relies on someone in Naqui’s position to be trusted to mark his book in line with the market. Naqui’s actions amounted to a sustained course of deliberate and dishonest misconduct and fell short of the standards expected from approved persons,” said Margaret Cole, the FSA’s managing director of enforcement and financial crime. “Our tough action in this case should serve as a deterrent to others who might damage market confidence by acting in a similar manner.”

IE