From a $126 Million Bonus to Jail: The Fall of a Star Trader

Christian Bittar was once among Deutsche Bank AG’s highest-paid traders, a math whiz who earned a near 90 million-pound ($126 million) bonus in 2008 alone. Now he’s sitting in a U.K. prison.

The 46-year-old former star banker pleaded guilty in a London court on March 2 to conspiring to rig the interest-rate benchmark known as Euribor. He’s in custody and will be sentenced after a related trial ends this summer. A court lifted reporting restrictions on his plea Thursday.

It’s a seminal moment for U.K. prosecutors in their six-year investigation. Bittar, famous for receiving multi-million dollar bonuses, is one of the highest-profile traders to be convicted in the global rate-rigging probe.

“It wouldn’t be right to comment on this at the moment," David Savell, Bittar’s lawyer at Locke Lord LLP in London, said by telephone Thursday.

When the scandal first engulfed the business world after the global financial crisis a decade ago, the initial focus was on banks, which paid about $9 billion in fines for manipulating the London interbank offered rate and its euro counterpart. Then prosecutors started homing in on the traders behind the behavior, including big shots such as Bittar and former UBS Group AG trader Tom Hayes, who was the first person convicted in the U.K. probe.

Deutsche Bank, for one, was fined $2.5 billion by global regulators in 2015 for failing to prevent attempts to rig benchmark rates and Bittar featured prominently in the penalty notices. Identified only as “Manager B” in the U.K. Financial Conduct Authority’s settlement notice and “Trader Three” by the U.S. Department of Justice, he was accused of colluding on Euribor submissions.

But Bittar was already famous in London’s financial district long before his role in the rate-rigging scandals became widely known.

His legend loomed large after he made a fortune for Deutsche Bank during the upheaval of 2008, by betting on short-term interest rates. One trading strategy involved wagering the cost of borrowing in euros for three and six months would rise more quickly than one-month rates. That paid off after Lehman Brothers Holdings Inc. collapsed that September and banks refused to lend to each other for all but the shortest periods. That year alone Bittar earned a 90 million-pound bonus.

But he wasn’t always wealthy. Growing up in Senegal, Bittar showed an early aptitude for math and attended one of the top French Grandes Ecoles universities, according to two people with knowledge of his upbringing, who didn’t want to be identified talking about Bittar’s history.

After college he joined Societe Generale SA in Paris as a quantitative analyst, rising to the role of trader, before Deutsche Bank poached him for its London office. He later moved to Singapore with the German lender.

Called Mr. Basis Point by his colleagues at the bank because of his trades on minuscule changes in short-term interest rates, he was famous for alternating between fad diets and eating binges. One week he would be on an egg-only regimen and the next be back to eating junk food and downing Cokes.

But even after he became a wealthy trader, he still lived in a relatively modest London house -- by banker standards -- with his wife and children. His car wasn’t flashy and colleagues said sartorial elegance wasn’t his top priority. He’d be at work every day by 6:30 a.m., focused and intense.

Despite his outsize bonuses, on several occasions he lobbied his boss to get a better pay deal. The trader, who has been described as soft-spoken, threatened to quit and join a hedge fund if his demands weren’t met, according to a former colleague.

But the end came quickly for Bittar amid the mounting rate-rigging probes in the U.S. and U.K.

He was fired in December 2011, as Deutsche Bank severed its ties with the trader to “best protect” itself amid the regulatory scrutiny. Internal emails seen by Bloomberg show that Bittar was likely read terse notes from human resources over the telephone that thanked him before being told his employment was being terminated.

As a proprietary trader he was entitled to a percentage of the profits he made for the bank. When he was fired amid criminal and regulatory probes, he lost about 40 million euros ($49.2 million) in unvested stock. After he was let go, he briefly joined hedge fund BlueCrest Capital Management LLP.

In its 2015 settlement with Deutsche Bank, the Justice Department said "Trader Three" -- Bittar -- was the firm’s most profitable derivatives trader from 2003 to 2010.

He was issued a penalty notice by the FCA in 2014 with a proposed fine of 10 million pounds. The penalty, including a ban from the industry, was put on hold pending the outcome of the criminal proceedings. A spokeswoman for the FCA declined to comment on its status Thursday.

Picture: pixabay.com

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