Armin S. (complete name unknown, born ) is a German independent securities trader. He achieved international recognition in 2017 when he filed a lawsuit against BNP Paribas for its continued refusal to deliver €163 million in securities he had purchased in December 2015, one of the largest civil cases brought by a private investor in Germany.
Career
Armin S. started his career as a trader at the German WestLB Investment boutique. Afterwards he worked eight years at Citigroup on the trading floor.
Subsequently, he set up his own office to trade for his own account. Armin S. compared his job with the work of a used car dealer, constantly buying and buying shares of stock in a corporation, or securities representing other financial instruments, making his margin on the bid–ask spread, the difference between the selling price and buying price. He tracks the high-speed changes in these prices through a computer program, which alerts him to changes in the bid–ask spread of a share or security, and the computer can even submit purchase orders for these based on criteria he has included in the program. This focus on short term moves of bid–ask spreads means that his researching the underlying long-term expectations for a specific company, nor the sometimes unknown components that make up a security. For example, the security he purchased that led to his €163 million lawsuit against BNP Paribas was only known to him as DE000AA2GDQ0, with no further information identifying what the security actually represented, but his program identified it as having a bid–ask spread worthy of a purchase.
Lawsuits filed against BNP Paribas
In June 2016, the German magazine Focus was the first to publish an article regarding a December 2015 erroneous trade of €163m allegedly involving BNP Paribas Arbitrage. The bank had sold 3,000 units of a security to the then-38-year-old Armin S. at BNP's posted price of €108.80 per unit, totaling €326,400, but the true price should have been €54,312 per unit, valuing the securities at €163 million, according to BNP. The error had gone unnoticed by BNP for several days, and BNP had even reconfirmed sale to Armin S. at the €108.80 per unit price. The prevailing erroneous trade rules allowed any such trades greater than €20,000 to be canceled as late as 11a.m. of the next trading day; as the trade had occurred on Friday 4 December 2015, BNP had until 11a.m. on Monday 7 December 2015, but did not try to cancel until 15 December 2015the seventh trading day after BNP's erroneous trade. The lawyer for Armin S., Mario Bögelein, stated that a bank not recognizing an error of this magnitude should not be protected by law.
In September 2016, Armin S. commented on his case in the German magazine AnlegerPlus, questioning the breaches on the risk-management side of BNP.
On 19 May 2017, Armin S. filed an initial €1 million civil suit against BNP in Frankfurt District Court, believing that a decision by the court in favor of his position could then confirm that BNP must pay the remainder, while avoiding the significant legal cost of his losing a full €163 million civil suit. He stated that he would refile with a €152 million suit if BNP were to drag the case into Germany's Federal Court of Justicethe largest civil case by one individual in German history.
On 5 July 2017, Armin S. commented that the lawsuit would not have been necessary if, in 2015, BNP had simply acknowledged that it had made a mistake and had also broken the erroneous trade rules, then tried to negotiate a settlement on the €163 million trade. He reemphasized that the third largest bank in Europe, with (then) €42 billion in gross annual income, should have trading systems and risk management that actually works, rather than simply relying on "arrogance... They think they're the best and smartest - which they often are - but as soon as something goes against them, they ignore you."
In July 2017, after Armin S. filed his lawsuit, Swiss-based lawyer and financial controller Michael Lusk wrote an article questioning "Do banks' internal control systems work?", and discussing how Armin S. had approached the Federal Financial Supervisory Authority (BaFin) of Germany, as well as the European Central Bank (ECB), to highlight that BNP put the German and European financial systems at risk by not spotting the mistake in their risk management programs and thereby violated supervisory rules of the ECB.