Three former foreign exchange traders who worked at some of the world's largest banks were indicted yesterday (January 10) on a conspiracy charge to manipulate EUR/USD, one of the most actively traded currency pairs, and eliminate competition.
The one-count indictment filed in the US District Court for the Southern District of New York marks a big win for the US Department of Justice (DoJ), which has vowed to hold individuals accountable for corporate misconduct amid the alleged years-long rigging of the currency market. To date, six individuals have been charged by the DoJ.
If found guilty of conspiracy, the three men – Richard Usher, formerly of RBS and JP Morgan; Raymond Ramchandani, ex-Citicorp; and Christopher Ashton, formerly of Barclays – each face a maximum penalty of 10 years in prison and a $1 million fine.
The men are believed to be part of a group of traders who called themselves ‘the Cartel' or ‘the Mafia', who conversed over the telephone and via electronic messages and daily chatroom messages to conspire the rigging. The DoJ said the accused and other co-conspirators engaged in anti-competitive behaviour when they colluded around the time of the fixes, and also when they co-ordinated their orders and trading to manipulate the price of the currency pair, refraining from those activities at certain times.
"Whether a crime is committed on the street corner or in the corner office, no-one gets a free pass simply because they were working for a corporation when they broke the law. Today's indictment reiterates our commitment to holding individuals accountable for corporate misconduct," said Sally Yates, deputy attorney general of the US, in a press statement.
According to the indictment, between 2007 and January 2013, the three men and other co-conspirators took part in a "combination and conspiracy to suppress and eliminate" competition for the buying and selling of EUR/USD in the US, and other countries, when they fixed, stabilised, maintained, increased and decreased the price of the currency pair, and rigged the bid-offer in the spot market.
Today's announcement reinforces the FBI's commitment to investigate and prosecute individuals responsible for criminally interfering with the global financial markets
Paul Abbate, FBI
Justice department officials believe Usher and Ramchandani knowingly participated in the alleged conspiracy from December 2007, while Ashton supposedly joined the scheme in December 2011.
"The charged conspiracy involved competitors manipulating the exchange rate for the hundreds of billions of dollars traded on foreign exchange markets for their benefit and to the detriment of their customers. We previously secured criminal convictions of the financial institutions involved in the misconduct. Today we seek to hold accountable the individuals who conspired on their behalf," said principal deputy associate attorney general Bill Baer.
Stephen Pollard, a partner in WilmerHale's Criminal Litigation Practice, who represents Ramchandani, said: "Mr Ramchandani's conduct was already investigated for over 18 months by the Serious Fraud Office (SFO), and rejected for prosecution on the evidence. It is unacceptable for the American DoJ to by-pass the SFO decision and seek to prosecute conduct undertaken on British soil by British citizens where the British regulators have confirmed there was no criminal offence."
On January 4, Jason Katz, a former emerging markets forex trader at Barclays and BNP Paribas, pleaded guilty to an antitrust conspiracy. He is the first individual to plead guilty in the DoJ's forex investigation.
Prior to that, on July 20, 2016, the DoJ brought charges against two HSBC forex executives, Mark Johnson and Stuart Scott, for allegedly front-running a client order.
As the majority of the men being charged live outside the US, it is likely the DoJ will have to issue an extradition request to the UK for them to face the charges locally, unless they willingly surrender to the US.
"These former bank traders are alleged to have gained an unfair advantage on their counterparts by committing corporate fraud involving the manipulation of the foreign currency exchange. Their actions affected worldwide trading positions in the global market-place. Today's announcement reinforces the FBI's commitment to investigate and prosecute individuals responsible for criminally interfering with the global financial markets," said Paul Abbate, assistant director in charge at the FBI's Washington field office.
On May 20, 2015, Barclays, Citicorp, JP Morgan and RBS agreed to plead guilty to conspiring to fix prices and rig bids for the dollar and euro exchanged in the forex spot market, and they paid out more than $2.5 billion in criminal fines. Those pleas were accepted on January 5, 2017, and the banks sentenced, the DoJ said.
So far, big banks have paid out a total of almost $12 billion in criminal and civil fines in connection with the ongoing forex benchmark manipulation scandal.
This article was originally published on Risk.net's sister website, FXWeek.com.
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