UT (Tax & Chancery) UT-2022-000134 UT-2022-000135 UT-2022-000137 - [2025] UKUT 00214 (TCC)

The notes of the Traders’ interviews with Compliance do not present a clear picture of the explanations that were given to Compliance by the Traders. There are several references to the Traders being concerned that orders placed by the Desk were being front-run by algorithms, although that was then said not to be the reason for the trades highlighted by Eurex. The notes all refer to price discovery (even those for Mr Lopez, who is said to have stated that price discovery was common at his previous employer), there are some references in the notes of Mr Urra’s interviews that he was trying to get size into the books in a curve position if other dealers were hit by cash bond sellers at once (and this was reflected in the draft note he provided on 2 August 2016), and the note for Mr Lopez refers to the multiple orders saying that this may have been a result of the settings on his PC.

The Authority sought to rely on the fact that these notes had been signed by each of the Traders without amendment. They were signed by Mr Urra more than two months after the interviews, and by Mr Lopez two weeks after his interview; Mr Sheth’s signature is undated. The Traders said they didn’t realise the importance of checking the accuracy of the notes at the time.

The Tribunal is not satisfied that these notes are an accurate summary of the interviews – we do not know when they were prepared, it is clear that there are some substantive inaccuracies as can be seen from the reference to, and explanation for, Mr Lopez placing multiple orders (which he did not do, and this paragraph does not seem to have been copied across from one of the other notes as the drafting is different). The dates on which they were signed by Mr Urra and Mr Lopez would suggest that these notes were presented to the Traders for signature just before MHI finalised the MHI Compliance Report.

From reading these notes, even proceeding on the basis that they are somewhat inaccurate summaries, it is not apparent to the Tribunal that Compliance at that time identified from the explanations that were given that the Information Discovery Strategy was one that Mr Urra had devised and was not used by other market makers, that Mr Lopez was using a different strategy to that which had been described by Mr Urra and Mr Sheth, or that these strategies had been deployed on multiple occasions before and after the activity identified by the Exchange.