Forex rigging

BNP Paribas will pay the New York Department of Financial Services (DFS) $350M to settle a probe into allegations that it was involved in currency rigging in the bank’s foreign exchange business. In a statement, the French bank said that it “deeply regrets” the misconduct, which took place between ’07 and ’13.

The DFS said that over a dozen BNP Paribas sales people and traders in NY as well as other trading hubs rigged forex rates and took part in other illegal activities. BNP Paribas traders worked in online chat rooms with traders from competing companies, making fake trades and improperly sharing customer information that should have stayed confidential. Members of the bank’s sales team are also accused of misleading customers regarding prices.

Among the alleged misconduct cited by the DFS is that of a BNP Paribas trader in NY who is accused of not only rigging different currencies but also of executing bogus trades overnight to move rates and then frequently cancelling the trades within seconds of making them. In another example cited, one of the bank’s traders in Japan allegedly improperly disclosed customer information involving yen trading with several competitor traders.

Bloomberg reports that according to sources, Matt Gardiner, a former UBS Group AG (UBS) trader who was part of the instant-messaging group the federal government identified when obtaining guilty pleas from Barclays PLC (BARC), Royal Bank of Scotland (RBS), UBS, Citigroup (C), and JPMorgan Chase & Co.(JPM) over currency-rate manipulation, is working with prosecutors to pursue certain individuals over the rigging allegations. The Cartel chat room to which Gardiner belonged existed from at least 12/07 through 1/013.

According to prosecutors, traders who were part of the chat room communicated in code to share information about orders made by clients and to coordinate euro-dollar trades so that they could make more money. Having someone like Gardiner working with the government could help prosecutors understand what the traders were doing together. It’s unknown at this time whether his cooperation is part of a prosecution deal he may have reached.

His former firm, UBS, was granted immunity from antitrust charges because it was the first financial institution to report the market misconduct. Meantime, the banks whose traders were in the Cartel have turned over chat transcripts to the U.S. Department of Justice and foreign authorities. A lot of the chats occurred right before daily fixes, which is the short period of time when data providers are able to get a picture of trading in order to establish daily rates.

Articles Tagged with Forex rigging

BNP Paribas Settles NY Currency Rigging Investigation for $350M

Former UBS Trader is Helping Prosecutors Pursue Forex Rigging Cases Against Individuals