Article: FBI arrests senior HSBC banker accused of rigging multibillion-dollar deal

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FBI arrests senior HSBC banker accused of rigging multibillion-dollar deal

Rupert Neate in New York and Jill Treanor in London, 20 July 2016

Mark Johnson and a colleague allegedly defrauded clients and ‘manipulated the foreign exchange market to benefit themselves and their bank’

A senior HSBC banker has been arrested by the FBI as he attempted to board a transatlantic flight and charged him with fraudulently rigging a multibillion-dollar currency exchange deal.

Mark Johnson, a British citizen and HSBC’s global head of foreign exchange trading, and a colleague are accused of “defrauding clients” and alleged to have “corruptly manipulated the foreign exchange market to benefit themselves and their bank”.

He was arrested on Tuesday night shortly before he was due to fly to London from New York’s JFK airport, and was due to be formally charged by a judge at Brooklyn federal court later on Wednesday. He was later released on bail.

A second Briton, Stuart Scott, who was HSBC’s European head of foreign exchange trading in London until December 2014, is accused of the same crimes. A warrant was issued for Scott’s arrest.

They are the first people to be charged in connection with the US government’s long-running investigation into bankers’ alleged rigging of the $5.3tn (£4tn) per day forex market.

“The defendants allegedly betrayed their client’s confidence, and corruptly manipulated the foreign exchange market to benefit themselves and their bank,” said the US assistant attorney general Leslie Caldwell. “This case demonstrates the [US Department of Justice’s] criminal division’s commitment to hold corporate executives, including at the world’s largest and most sophisticated institutions, responsible for their crimes.”

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Article: Regulators fine global banks $4.3 billion in currency investigation

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Regulators fine global banks $4.3 billion in currency investigation

Kirstin Ridley, Joshua Franklin, Aruna Viswanatha, 12 November 2014

Regulators fined six major banks a total of $4.3 billion for failing to stop traders from trying to manipulate the foreign exchange market, following a yearlong global investigation.

HSBC Holdings Plc, Royal Bank of Scotland Group Plc, JPMorgan Chase & Co, Citigroup Inc, UBS AG and Bank of America Corp all faced penalties resulting from the inquiry, which has put the largely unregulated $5-trillion-a-day market on a tighter leash, accelerated the push to automate trading and ensnared the Bank of England.

Authorities accused dealers of sharing confidential information about client orders and coordinating trades to boost their own profits. The foreign exchange benchmark they allegedly manipulated is used by asset managers and corporate treasurers to value their holdings.

Dealers used code names to identify clients without naming them and swapped information in online chatrooms with pseudonyms such as “the players”, “the 3 musketeers” and “1 team, 1 dream.” Those who were not involved were belittled, and traders used obscene language to congratulate themselves on quick profits made from their scams, authorities said.

Wednesday’s fines bring total penalties for benchmark manipulation to more than $10 billion over two years. Britain’s Financial Conduct Authority levied the biggest penalty in the history of the City of London, $1.77 billion, against five of the lenders.

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Article: Six banks fined £2.6bn by regulators over forex failings

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Six banks fined £2.6bn by regulators over forex failings

BBC NEws , 12 November 2014

Six banks have been collectively fined £2.6bn by UK and US regulators over their traders’ attempted manipulation of foreign exchange rates. HSBC, Royal Bank of Scotland, Swiss bank UBS and US banks JP Morgan Chase, Citibank and Bank of America have all been fined.

A separate probe into Barclays is continuing. The fines were issued by the UK’s Financial Conduct Authority (FCA) and two US regulators.

The country’s Commodity Futures Trading Commission (CFTC) issued fines of $1.4bn to five banks, while the Office of the Comptroller of the Currency (OCC) added $950m in further fines to three lenders. Separately, the Swiss regulator, FINMA, has penalised UBS 134m Swiss francs.

Barclays, which had been expected to announce a similar deal to the other banks, said it would not be settling at this time.

“After discussions with other regulators and authorities, we have concluded that it is in the interests of the company to seek a more general coordinated settlement,” it said in a statement.

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Article: Criminal investigation into possible price rigging in London foreign exchange market

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Criminal investigation into possible price rigging in London foreign exchange market

Merco Press, 22 July 2014

The United Kingdom Serious Fraud Office (SFO) has launched a criminal investigation into allegations of price rigging in the £3tn-a-day foreign exchange market. The probe will look into allegations of “fraudulent conduct”, the director of the SFO said in a statement.

Around 15 international agencies are investigating allegations of collusion and price manipulation. It is alleged that traders used online chat-rooms to plan the fixing of benchmark prices.

The Financial Conduct Authority (FCA) said in October it had joined other regulators around the world in scrutinizing firms over the potential manipulation of the foreign exchange market.

Several investment banks, including Barclays and HSBC have already suspended currency traders due to the investigation by the FCA. And in March this year the Bank of England suspended one member of staff over the probe.

At the time the head of the Financial Conduct Authority, Martin Wheatley, said that currency manipulation was “every bit as bad” as the Libor scandal, where banks including Barclays, Royal Bank of Scotland and UBS paid fines totaling 6bn dollars relating to Libor fixing.

For the criminal probe the SFO will work in co-operation with the FCA and the US Department of Justice, which announced its own criminal investigation last October.

Earlier this year US prosecutors flew to London to question individuals over allegations of market manipulation.

The Serious Fraud Office is an independent UK government department responsible for investigating and prosecuting serious and complex fraud, bribery and corruption. It is headed by the Director, David Green CB QC, who exercises powers under the superintendence of the Attorney General. These powers are derived from the Criminal Justice Act 1987.

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Article: Osborne to target foreign exchange manipulation in City clean-up

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Osborne to target foreign exchange manipulation in City clean-up

Kamal Ahmed, 02 June 2014

The obscure and complicated foreign exchange market is to be the next target of Treasury action, I have been told.

The chancellor is working with Whitehall officials and the international Financial Stability Board (FSB) on new regulations which will be imposed on the market. At the moment, foreign exchange (known in City shorthand as “forex”) is largely unregulated and left to the bank traders who execute deals on behalf of global companies. Companies use forex deals to move money between different currencies and a large part of the market is dealt through London.

One senior official I have spoken to agreed that the public would be “very surprised” that such a major market was clearly open to abuse. The Treasury is likely to announce a set of measures to “clean up the market”, probably in the next fortnight.

The prices in forex are set by traders who are doing the deals. Traders are able to pick a selection of the trades they have been asked to execute, meaning they can choose those most advantageous to their bank. The prices are set at the 4pm “fix”, a daily City benchmark against which currencies are priced. I have written a short “How It Works” at the end of this blog on the allegation that forex is manipulated.

Regulators around the world including the Financial Conduct Authority (FCA) in London and the US Department of Justice are investigating allegations of forex manipulation. It has been reported that at least 15 banks are involved and nine are thought to have suspended or fired traders. No allegations have been proved and no admissions of fault made.

Martin Wheatley, the head of the FCA, said the allegations, if substantiated, could be “every bit as bad as Libor”, referring to the revelations three years ago that the market which governs how banks lend to each other was regularly fixed.

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Article: Swiss probe banks over foreign exchange market

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Swiss probe banks over foreign exchange market

BBC News, 31 March 2014

RBS, Barclays, UBS, Credit Suisse, Zuercher Kantonal Bank, Julius Baer, JP Morgan and Citigroup are being probed by Swiss competition commission, Weko.

“Evidence exists that these banks colluded to manipulate exchange rates in foreign currency trades,” Weko said.

The regulator opened a preliminary investigation last October. Weko said the information it had so far suggested that most important exchange rates are affected.

Authorities worldwide are investigating allegations that some foreign exchange traders have colluded in setting certain key exchange rates in the foreign exchange market, resulting in big profits. Continue reading “Article: Swiss probe banks over foreign exchange market”