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LONDON—A former UBS AG trader is to fight an attempt by the U.K. financial regulator to ban him over alleged interest-rate rigging.

Arif Hussein, a junior sterling rates trader at UBS between 2000 and 2009, said the Financial Conduct Authority failed to conduct a proper and impartial investigation, and cut a "cozy deal" with UBS after relying on evidence gathered by UBS lawyers. A UBS spokesman declined to comment. A FCA spokeswoman also declined to comment.

The FCA on Thursday said it wants to ban Mr. Hussein for "recklessly" sharing information on his trading positions with UBS staff in charge of the bank's London interbank offered rate, or Libor, submissions. The FCA said Mr. Hussein "closed his mind" to the risk that the information could be misused and shouldn't work again in financial services.

Lawyers for Mr. Hussein, who will challenge the FCA ban at a tribunal, say Mr. Hussein was instructed by his managers to disclose his positions to UBS traders in Zurich, and didn't know that those traders also acted as the bank's Libor submitters. The lawyers say the trading positions were far from secret, since they were uploaded on a daily spreadsheet on UBS's intranet.

"When communicating his Libor exposures to his colleagues Mr. Hussein was doing no more than repeating information already contained in the Libor exposure spreadsheet," Mr. Hussein's lawyers said.

Mr. Hussein in a statement said the FCA's investigation relied on "incomplete, partial and misleading information" provided by UBS.

"There was nothing approaching a proper investigation in this case, just a cozy deal done with a bank serving its own interests behind closed doors without any independent scrutiny," Mr. Hussein said.

A panel of banks including UBS submitted estimates each day of the rate they would expect to pay to borrow in the interbank market, setting the Libor rate used in trillions of dollars of financial contracts globally. Regulators and prosecutors in several countries have taken action against more than a dozen financial firms including UBS, alleging that their traders conspired internally or with their counterparts at other banks to manipulate rates.

UBS acknowledged wrongdoing over Libor and paid $1.7 billion to settle with U.S., U.K. and Swiss authorities in December 2012. At least three dozen people connected to the scandal left UBS. Tom Hayes, the alleged ringleader of a Libor rate-rigging network while working at UBS between 2006 and 2009, is serving an 11-year sentence after being convicted of conspiracy to defraud by a U.K. court last summer.

Six brokers who allegedly conspired with Mr. Hayes were acquitted by a London jury in January. A third Libor trial is under way in London involving a separate alleged conspiracy to rig rates.

Regulators and prosecutors probing Libor manipulation so far have focused their actions on relatively junior staff. No charges have been brought against banks' senior managers despite repeated allegations by people involved in the probes that senior managers and executives were aware of or condoned alleged rate manipulation.

On Tuesday, a former Royal Bank of Scotland Group PLC trader was banned by the FCA from working in financial services.

Write to Margot Patrick at margot.patrick@wsj.com

(END) Dow Jones Newswires

April 14, 2016 08:15 ET (12:15 GMT)

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