Tough case against Chat Room guys
10 January, 2017
The imminent criminal charges are against members of ‘The Cartel’ chat group, would make good on the government’s long-running promise it would hold individuals to account in the case. The men are located outside of the U.S., meaning they would have to be extradited, a process that can take months, if not years. The senior dealers who participated in The Cartel were Richard Usher, formerly of JPMorgan Chase & Co., Rohan Ramchandani, formerly of Citigroup Inc. and Chris Ashton, formerly global head of spot trading at Barclays Plc. Another member, Matt Gardiner, formerly of UBS Group AG, has been helping prosecutors build cases against the traders. Citigroup, Barclays, JPMorgan and Royal Bank of Scotland Group Plc pleaded guilty in the U.S. in May 2015 to conspiring to rig currency rates.
[March 24 2016 Credit Suisse Group AG triggered $258 million of writedowns 2016 through March 11, after $495 million of losses in the fourth quarter 2015. ]
Credit Suisse Group AG announced that a buildup of illiquid trading positions means the bank will probably post a second straight quarterly loss as it unwinds the trades and deepens cuts at that business. Mark Williams, “Either trades were fraudulent and traders should be fired or senior management should take responsibility for allowing excessive risk-taking to happen.The CEO’s admission that he wasn’t aware of the bank’s exposures to securitized products and distressed debt is “somewhat alarming,” The stock has tumbled about 39 percent so far this year, almost twice as much as the index. The Zurich-based lender’s holdings of distressed debts, leveraged loans and securitized products, including collateralized loan obligations, triggered $258 million of writedowns this year through March 11, after $495 million of losses in the fourth quarter, according to a presentation.
[January 31 Barclays, Credit Suisse pay up for ‘Dark Pools’ ]
Barclays, Credit Suisse are expected to pay a combined total of $154.3 million o settle federal and state charges that they misled investors in their dark pools and an additional $24.3 million by Credit Suisse in disgorgement to the SEC for executing 117 illegal sub-penny orders out of its dark pool known as “Crossfinder.”.
[January 23 2015 High-frequency trading operations listed in complaint against Barclays]
Dark pools , where ‘high frequency trade’ firms traded, accounted for 15 percent of total U.S. volume in the third quarter. New York Attorney General Eric Schneiderman filed his suit against Barclays under the Martin Act, an almost century-old law that gives him broad powers to root out corporate fraud. Barclays was misleading its dark pool customers that it was monitoring and suppressing “predatory” trading by such firms, while simultaneously soliciting business from those firms, according to the complaint.
Almost a year after he made a splash with subpoenas of six high-frequency trading operations, the names of some of these firms, Jump Trading LLC, Chopper Trading LLC and Tower Research Capital LLC, cropped up in documents filed this week in the state court in Manhattan. The firms aren’t defendants, though. They are listed as part of Schneiderman’s proposed updated complaint against Barclays, which ran the private trading venue, or dark pool, where these firms traded.
[January 22 BOE “bully the fix”: wrong to interpret that they were talking about “illegal manipulation”]
A global probe of foreign exchange dealings has exposed cozy relations between the BOE and banks. “The fix” is a benchmark for currencies rates. Traders are executing unnecessarily large transactions to move rates around in their own favor. In March 2014, The Bank’s governor, Mark Carney, told MPs this week that the scandal had the potential to be bigger than the rigging of Libor, which has resulted in big-name banks being fined billions of pounds on both sides of the Atlantic.
The Bank of England’s Oversight Committee commissioned Grabiner to investigate whether BOE staff knew currency traders shared confidential client information with counterparts at other firms to rig key currency benchmarks. His report found the central bank’s chief currency dealer, Martin Mallett, had concerns about the practice and didn’t escalate them, but hadn’t acted “in bad faith.” It was published Nov. 12, the same day six banks were fined $4.3 billion by U.S. and U.K. regulators who found senior dealers colluded with one another to rig currency markets. Traders, some of whom were subsequently fired for their activity, interpreted the central bank’s silence as an indication that it regarded their behavior as acceptable, according to people familiar with the traders’ thinking.
The central bank separately announced that day that it fired Mallett, saying it wasn’t related to Grabiner’s report. Anthony Grabiner, the lawyer who led the probe, refused to comment on Mallett’s dismissal.
Norman took issue with Grabiner’s interpretation of a telephone call in October 2011 between Mallett and an unidentified currency trader that was included in his report.
The trader asked whether trying to “bully the fix” was problematic. “Well that’s market manipulation isn’t it?” Mallett responded.
“Yep absolutely,” the trader said, according to the report. Mallett asked the trader to follow up with him about the practice. The trader never did, and Mallett kept it to himself.
Grabiner then said it was wrong to interpret that they were talking about “illegal manipulation,” and said there were instances where market manipulation could be legitimate.
Norman disagreed, saying it was clear that he was talking about illegal manipulation. He also questioned why Grabiner relied on the written transcript rather than listen to the actual call to hear any nuances in the exchange.
Grabiner said Norman was “wrong” and not equipped to form that judgment, saying that his own interpretation following interviews with Mallett was “right.” No one he spoke with challenged whether the transcripts gave a full picture of the exchanges, Grabiner said, so he didn’t need to hear recordings.
Treasury Select Committee members quizzed, on whether he too readily accepted a former central bank employee’s version of key events. They also questioned the depth of his knowledge of the currency market and how long he spent on the report.
[January 13 Paul Nash arrested by SFO, but not charged, in rigging the $5.3tn-a-day foreign-exchange market]
The Serious Fraud Office, UK’s top fraud prosecutor, has arrested a currency trader Paul Nash in relation to its criminal investigation into whether individuals rigged the $5.3tn-a-day foreign-exchange market, Criminal investigations, including that of the SFO, are ongoing. The arrest is not linked to former traders who were members of a chat room dubbed “the cartel”, according to people familiar with the situation. Nash emigrated to Canada on Christmas Day and has rented out his family home. His arrest was not by appointment, as is typical in such cases, but was an “arrest and raid”
Nash, who has not been charged with any offence, appeared at Westminster Magistrates’ Court on Dec. 23 over variations to his bail conditions. These included that he would reside at a specified address in British Columbia.
November 17, 2014 Britain’s big five will incur another £21bn – with other European banks and US firms taking that total to £45bn.]
So far £150bn in fines and legal costs have already been incurred by big-name banks, according to analysts at Morgan Stanley, who reckon that in the next two years Britain’s big five will incur another £21bn – with other European banks and US firms taking that total to £45bn. Last week’s revelations of the free-for-all culture in the dealing rooms of the City also look set to be repeated soon. Other regulators are still investigating the foreign exchange markets and US attorney general Eric Holder expects his department to finish the investigation “relatively soon” – a development that could lead to both civil and criminal charges. . Some 13 individuals face charges linked to Libor rigging. The SFO’s investigation into the foreign exchange markets is in the early stages; and Chancellor George Osborne on Friday promised resources for action by the Serious Fraud Office.
[November 12 I trust you implicitly :Examples of Misconduct in Private Chat Rooms]
I trust you implicitly
Regulators fined six major banks including Citigroup (C.N) and UBS (UBSN.VX) a total of $4.3 billion for failing to stop traders from trying to manipulate the foreign exchange market, following a year-long global investigation.
HSBC (HSBA.L), Royal Bank of Scotland (RBS.L), JP Morgan (JPM.N) and Bank of America (BAC.N) also face penalties resulting from the inquiry that 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.
[November 11 HSBC sets aside £237m for FCA forex investigation , Group pre-tax profits rose to £2.89bn in Q3HSBC has set aside £237m to cover the costs of an FCA investigation into the manipulation of foreign exchange markets. “Discussions are ongoing with the FCA regarding a proposed resolution of their foreign exchange investigation with respect to HSBC Bank’s systems and controls relating to one part of its spot FX trading business in London.
“Although there can be no certainty that a resolution will be agreed, if one is reached, the resolution is likely to involve the payment of a significant financial penalty. We continue to co-operate fully with regulatory and law enforcement authorities in the UK and other jurisdictions.”
Group pre-tax profits rose 2 per cent from £2.84bn in Q3 2013 to £2.89bn in the three months to 30 September.
[december 11 2012 U.S. decides HSBC too big to Indict?]
HSBC has agreed to pay $1.9bn in settlement of U.S. money-laundering charges.
State and federal authorities decided against indicting HSBC in a money-laundering case over concerns that criminal charges could jeopardize one of the world’s largest banks and ultimately destabilize the global financial system.
While the settlement with HSBC is a major victory for the government, the case raises questions about whether certain financial institutions, having grown so large and interconnected, are too big to indict.
After months of discussions, prosecutors decided against a criminal indictment, but only after securing record penalties and wide-ranging sanctions.
The HSBC deal includes a deferred prosecution agreement with the Manhattan district attorney’s office and the Justice Department. The deferred prosecution agreement, a notch below a criminal indictment, requires the bank to forfeit more than $1.2 billion and pay about $700 million in fines, according to the officials briefed on the matter. The case, officials say, will claim violations of the Bank Secrecy Act and Trading with the Enemy Act.
Prosecutors found that HSBC had facilitated money laundering by Mexican drug cartels and had moved tainted money for Saudi banks tied to terrorist groups.
On November 11 HSBC said it had “reached agreement with United States authorities in relation to investigations regarding inadequate compliance with anti-money laundering and sanctions laws.” The bank is also expected to reach a settlement over the matter with Britain’s Financial Services Authority, according to a person with direct knowledge of the matter.
November 10, federal and state authorities also won a $327 million settlement from Standard Chartered, a British bank. The bank, which in September agreed to a larger settlement with New York’s top banking regulator, admitted processing thousands of transactions for Iranian and Sudanese clients through its American subsidiaries. To avoid having Iranian transactions detected by Treasury Department computer filters, Standard Chartered deliberately removed names and other identifying information, according to the authorities.
“HSBC has signed a Deferred Prosecution Agreement for breaches of the US Bank Secrecy Act, the Trading with the Enemy Act and assorted money laundering offences. This is in effect putting the bank on probation,” he said.
“But if HSBC had been indicted for these offences, that would have meant that the US government and others could no longer have conducted business with it, which would have been humiliating and highly damaging.”
The bank is the biggest in Europe by market capitalisation, and made pre-tax profits of $12.7bn for the first six months of 2012.