U.S. looking at alleged forex manipulation - page 2
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Barclays suspends currency traders
UK bank Barclays has suspended six traders as part of a probe into suggestions that currency markets could have been rigged, the BBC has learnt.
The BBC's chief economics correspondent, Hugh Pym, said there was no suggestion of wrongdoing and that Barclays had declined to comment.
On Thursday, Royal Bank of Scotland suspended two traders in connection with the investigation.
The Financial Conduct Authority (FCA) probe is said to be at an early stage.
Of the six, some work in London and some in other parts of Barclays' global business, our correspondent said.
Regulators around the world, including the UK's FCA, are investigating the currencies market and Barclays, RBS, Citigroup, Deutsche Bank and UBS have all confirmed that regulators have been in contact with them over the currency probe. On Friday, JP Morgan Chase added that it was also being questioned.
"These investigations are in the early stages and the firm is co-operating with the relevant authorities," JP Morgan said.
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They are investigating traders. They are not investigation the ones that gave the orders. Nothing will change
Currency Traders Put on Leave Amid Investigation
Nearly a dozen traders have been placed on leave at five large banks in recent days amid a wide-ranging investigation into potential manipulation of the foreign-exchange market.
Authorities in Britain, the United States, Switzerland and Hong Kong are investigating whether traders colluded to rig some areas of currency trading, a market that overall generates more than $5 trillion of trades daily.
In particular, they are looking at discussion logs in chat rooms between currency traders at various firms and whether those discussions corresponded with improper trading activity, according to people briefed on the investigation.
On Friday, two British banks, Barclays and Royal Bank of Scotland, both placed traders on leave amid heightened scrutiny by regulators, according to people briefed on the investigation.
Six traders were placed on leave at Barclays and two traders were placed on leave at Royal Bank of Scotland, these people said.
They join currency traders who were placed on leave at Citigroup, Standard Chartered and JPMorgan Chase in recent weeks. In many cases, the traders have been placed on paid leave pending the outcome of the investigation, according to people briefed on the matter.
On Tuesday, UBS said it had “taken and will take appropriate action with respect to certain personnel as a result of our review, which is ongoing.” However, the bank declined to say what those actions might be or whether anyone had been placed on leave.
All the banks declined to comment Friday, citing their policies not to discuss personnel matters.
The latest investigation is another distraction for banks in London, which have been dealing with the fallout from accusations that they manipulated global interest rate benchmarks, including the London interbank offered rate, or Libor.
Libor is used as a base interest rate for a variety of financial products and is also used to help set interest rates for mortgages, credit cards and other loans.
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Fired Deutsche Bank Rates Traders Said to Return to Work
Four Deutsche Bank AG (DBK) traders who were fired in February as part of the lender’s probe into manipulation of benchmark interest rates returned to work, two people familiar with the matter said.
The men won reinstatement from a Frankfurt Labor Court in September after they sued Deutsche Bank. A spokesman for the lender confirmed that the traders returned to work yesterday and declined to comment further.
Regulators around the world are investigating whether more than a dozen firms, including Deutsche Bank, colluded to rig benchmark interest rates. Barclays Plc (BARC), UBS AG (UBSN) and Royal Bank of Scotland Group Plc are among companies that have been fined about $3.7 billion for rigging the London interbank offered rate, or Libor, the benchmark for more than $300 trillion of securities worldwide.
Norbert Pflueger, a Frankfurt-based employment lawyer, said sending staff back to work was a standard tactic to force the company to settle the case while an appeal is still possible. While Deutsche Bank hasn’t yet lodged an appeal, the deadline to file hasn’t passed.
“You send the employee back to the bank while the case is pending,” Pflueger said. “He shows up, which practically means to say: ’Hello, I’m back, but I am no longer employee XY - from now on I’m your problem.’”
The pressure created by having the employees back in the office helps when negotiating a settlement, he said.
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Six banks to be fined at least $2 billion for rate rigging
EU antitrust regulators will levy a record fine of at least 1.5 billion euros on six financial institutions, including Barclays (BARC.L) and Royal Bank of Scotland (RBS.L), for rigging the yen Libor interest rate benchmark, a banking industry source said on Wednesday.
The world's top interdealer broker, ICAP (IAP.L), and Dutch cooperative bank Rabobank RABO.UL are among the firms that will be fined, the person said. The names of the other two financial institutions were not immediately clear.
Switzerland's UBS (UBSN.VX) will not be fined because it was the first member of the group to come clean during the European Commission's investigation into wrongdoing, two sources familiar with the case confirmed to Reuters.
The yen Libor fines, likely to be the biggest so far to be handed out by Brussels, come on top of other penalties for a separate case involving the rigging of the Euribor benchmark interest rate, reported by Reuters on Tuesday.
Other regulators worldwide have also punished several banks and brokerages - including some of those to be fined by the European Commission - for misconduct.
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U.S. Investigates Currency Trades by Major Banks
From their desks at some of the world’s biggest banks, traders exchanged a series of instant messages that earned them the nickname “the cartel.”
Much like companies that rigged the price of vitamins and animal feed, the traders were competitors that hatched alliances for their own profits, federal investigators suspect.
If those suspicions are correct, the group of traders shared a mission to alter the price of foreign currencies, the largest and yet least regulated market in the financial world. And ultimately, they flooded the market with trades that potentially raised the cost of currency for clients but aided the banks’ own investments.
Now the instant messages, along with similar activity among other traders, are at the center of an international investigation into banks like Barclays, the Royal Bank of Scotland and Citigroup, according to recent public disclosures by the banks and interviews with investigators who spoke on the condition of anonymity. The investigators secured the cooperation of at least one trader, a development that has not been previously disclosed.
Although the investigation is at an early stage, authorities are already signaling the likelihood of a legal crackdown.
“The manipulation we’ve seen so far may just be the tip of the iceberg,” the United States Attorney General, Eric H. Holder Jr., said in a rare interview discussing an active investigation. “We’ve recognized that this is potentially an extremely consequential investigation.”
The banks all declined to comment. No one has been accused of wrongdoing, and any improper actions probably would have involved only a corner of the overall market. One former member of the group called the “cartel” has told colleagues that the nickname reflected the traders’ success, not any improper collusion, according to a person briefed on the group. The group was informal, the person said, and its name came from outside traders.
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FX Traders Said to Be Called For Interviews by U.K. Regulator
Foreign-exchange traders were asked to come in for interviews by the U.K. markets regulator as the probe into currency-rigging widens, two people with knowledge of the investigation said.
The U.K. Financial Conduct Authority has written and called the traders in recent weeks, inviting them to voluntarily discuss the probe, according to the people, who asked not to be identified because the probe is confidential. The individuals are among at least 40 traders whose communications are being examined by the regulator, one of the people said.
Regulators in the U.K., Switzerland, the U.S. and Asia are probing allegations of rate-rigging in the $5.3 trillion-a-day foreign-exchange market. Dealers in the industry were front-running client orders and attempting to rig the benchmark WM/Reuters rate by colluding with counterparts and pushing through trades before and during the 60-second windows when the benchmarks are set, Bloomberg News reported in June.
Chris Hamilton, a spokesman for the FCA based in London, declined to comment.
At least 12 traders have been suspended over the probe and about 11 banks, including Goldman Sachs Group Inc. and Barclays Plc (BARC), have said they’ve been contacted by regulators. A number of banks have also announced their own internal reviews.
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Deutsche Bank Investigated In Gold Manipulation Probe
A month ago, regulators in Europe began their investigation into manipulation of the "London gold fixing" (and we explained the methods here). While the complete history of gold manipulation goes a lot deeper than just banging the close on this crucial benchmark (which goes back to first world war); the decision by Germany's financial regulator (BaFin) to probe Deutsche Bank signals greater concerns over the precious metals markets. As The FT reports, BaFin has demanded emails and documents from Deutsche Bank as part of an investigation into potential manipulation of gold and silver prices.
Via The FT,Of course, despite day after day of closing price smackdowns (and the very occasaional vertical ramp), we are sure the regulators will find no wrong doing... for, as we noted here, this manipulation is by design, not malfeasance...it's for your own good...
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