Goldman Sachs has launched a global ban on the use of mobile phones on its trading floors, broken up a team of traders, and called in a London law firm to conduct an investigation, after allegations were levelled against one of its top dealers.
The investment bank investigated accusations that
its head of trading in London, Phil Hylander, favoured big hedge funds - tipping them off ahead of big transactions, it has recently emerged.
Questions were asked about the sale of shares in Infineon, a computer-chip maker, by Germany's Siemens in March 2003.
The shares fell 5 per cent in the midst of the sale, costing both Siemens and Goldman millions.
A trader at the bank, who was later sacked, tipped off hedge fund GLG Partners ahead of the sale, enabling it to avoid losses.
Accusations were also levelled against Mr Hylander. In particular, there were concerns he had been talking to a client on his mobile at key moments.
Goldman called in legal firm Freshfields Bruckhaus Deringer to investigate the accusations, and it found nothing wrong. I
mmediately after the trade, the bank sent a note round re-affirming its then policy, that mobiles were not to be used to transact business with clients.
A few months later, it brought in a worldwide ban on the use of mobiles on trading floors. A spokesman denied the ban was linked to the investigation.
Goldman then broke up a team of traders called the Risk Unit, which had been put together by Mr Hylander and used the bank's own money to execute high-risk trades.
This unit was given information about orders that clients had placed through Goldman, something seen as unusual.
Its access to client orders was withdrawn seven months after the Infineon trade and in 2004 it was closed down altogether.
A bank spokesman said that at no point had it been found that either Mr Hylander or Goldman had acted improperly, and that the Financial Services Authority had been kept informed of all relevant issues.
- INDEPENDENT
