The testimony was perhaps the strongest that prosecutors have put on in the case to date, though Oweida was only speaking in general terms. He was Morgan Stanley’s Americas foreign exchange sales head in 2017, but he was not involved in selling the option to Glen Point or in the bank’s own rand-dollar trading.
Phillips’ lawyers had objected to Oweida’s testimony due to his lack of direct involvement in the events at issue.
‘Next best thing’
“They couldn’t get the people who participated so they got the next best thing,” Sean Hecker, an attorney for Phillips, said outside the presence of the jury. “At some point it gets a little aburdist, this trial, honestly.”
US District Judge Lewis J Liman allowed Oweida’s testimony but said the defence could cross-examine him about whether market participants expect trading around barrier limits.
Under questioning by Hecker, Oweida said Morgan Stanley takes a variety of methods to reduce its risk from currency transactions and understands that counterparties will also hedge. Oweida acknowledged that both sides’ actions could affect the likelihood of a barrier event.
The broker who arranged Glen Point’s roughly $US2 million purchase of the option from Morgan Stanley in October 2017 testified on Tuesday that the bank tried to buy it back for $US13 million just a week before Phillips began his flurry of rand-purchasing.
The testimony by Graeme Henderson of JB Drax potentially bolsters the defence argument that Morgan Stanley would have recognised and anticipated Phillips’ trading strategy.
The case is US v Phillips, 22-cr-138, US District Court, Southern District of New York (Manhattan).
Bloomberg
