A Ferrari-loving British bond trader is being sued in London court after his $2.6 billion bet against US Treasuries at the outbreak of the COVID-19 pandemic backfired — costing Wall Street giants an estimated $250 million in losses, according to a report.
Singapore-based Jan Ralph, convinced the coronavirus threat was overblown, enlisted firms including Goldman Sachs, Citigroup and Wells Fargo to help him short Uncle Sam’s debt, Bloomberg reported.
Ralph’s tiny firm Blackbrook Asset Management Ltd., which held net assets of just $235,000, amassed trades more than 11,000 times that amount, the financial news outlet said.
The firm folded on March 10, 2020, after oil prices cratered and investors flocked to safe-haven bonds. It has no ties to Blackbrook Capital, a real estate investment firm bought by Cain International last year.
The 48-year-old Ralph denies any wrongdoing in the case, which opens on Tuesday, being brought by Blackbrook’s liquidators who accuse him of wrongful trading and breaking UK company law.
If found guilty, Ralph could be on the hook for all of the debts. Bloomberg reported that his lawyers will argue that his strategy failed due to a “wholly unforeseeable” slide in oil prices on March 5, 2020.
Blackbrook’s collapse foreshadowed the 2021 Archegos Capital Management implosion, which inflicted over $10 billion in losses on lenders.
The report cited legal documents that show Citigroup led with nearly $1 billion in trades, losing $49 million.
It added that Mitsubishi UFJ Financial Group Inc. (MUFG) lost $63 million, Goldman $57 million, and Bank of Montreal, Jefferies Financial Group Inc., and Wells Fargo & Co. combined for $58 million.
A Citi spokesperson said the bank was able to “limit the impact and implemented preventative measures”.
Reps for Goldman Sachs, Wells Fargo, Bank of Montreal, and Jefferies declined to comment, while MUFG did not respond to The Post’s request for comment.
Ralph was not immediately reachable for comment.
His trades involved the short selling of 30-year Treasuries, a practice banned in the EU and UK for domestic bonds.
Short-selling is when a trader sells bonds they do not own, betting that prices will fall before buying them back and pocketing the profits.
However, the price of US government debt rose as markets sought safer assets as COVID spread worldwide.
Within three days of that first transaction with Citigroup on Feb 20, 2020, Ralph was sitting on almost $600 million of trades, according to filings.
Several days later, that had more than doubled to $1.3 billion. Treasuries climbed instead of falling as COVID began to shut down swathes of the world.
Ralph added more trades, swelling to $2.6 billion by early March.
There were some warning signs: Blackbrook had few employees. Ralph’s London trading career was checkered, with short stints at firms like Illiquidx LLP and Morgan Capital Advisors LLP.
Ralph switched to Global Investment Strategy UK Ltd., which was later sanctioned by the US Securities and Exchange Commission for unauthorized trades.
“The negligible amount of capital in Blackbrook appears completely at odds with the amounts at risk,” Meyrick Chapman, owner of Hedge Analytics Ltd. and a former UBS and Elliott Management executive, was quoted as saying. “The due diligence appears almost comically absent.
“They didn’t have the capital to run anything like the positions they accumulated,” George Whitehead, a veteran bond trader, told Bloomberg.
As trades failed, bank staff grew alarmed.
A Bank of Montreal trader emailed Ralph about $200 million in overdue settlements, asking: “Is the other side a legit account? Just tell me that.”
An MUFG employee also raised concerns with their superiors after reportedly spotting Ralph’s flashy social media posts of his sports car collection and jetset lifestyle.
The Briton claimed he had raked in ÂŁ15 million ($19.5 million) in profits from 2016-2020, though UK filings showed under ÂŁ1 million in 2019 revenue.
Post-collapse, he overhauled his 1989 Ferrari Testarossa, according to the report, posting on his now-private Facebook account that it would “look and sound amazing.”
He continues flying his Cirrus plane around Asia, Bloomberg reported, praising it as “the best choice for my missions” in a 2023 Luxuo.com interview.
Ralph gave an interview to Singapore’s Straits Times about his sports cars, including a Ferrari Dino and Maserati GranCabrio, with neighbors recalling how he would rev their engines in upscale Singapore streets.
One recent Facebook post referenced D.B. Cooper, the 1971 hijacker who vanished after parachuting with ransom money.
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