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From Antitrust Law Daily, January 11, 2017

Three former traders indicted in foreign currency exchange investigation

By Jeffrey May, J.D.

Less than one week after the Department of Justice obtained its first plea agreement from an individual in its ongoing probe of price fixing in the foreign currency exchange (FX) market, three former traders for major banks were indicted for their alleged roles in a conspiracy to manipulate the price of U.S. dollars and euros exchanged in the FX spot market. The Justice Department announced yesterday that a federal grand jury in New York City indicted Richard Usher, Rohan Ramchandani, and Christopher Ashton (U.S. v. Usher, Criminal No. 17 CRIM 019).

According to the one-count indictment, from at least December 2007 through at least January 2013, Usher, Ramchandani, and Ashton conspired to fix prices and rig bids for the euro—U.S. dollar currency pair. Called "the Cartel" or "the Mafia," this group of traders participated in telephone calls and electronic messages, including near-daily conversations in a private electronic chat room, to carry out their conspiracy, the government contends.

During the alleged conspiracy, Usher had served as the head of G11 FX Trading-UK at an affiliate of The Royal Bank of Scotland plc, as well as former Managing Director at an affiliate of JPMorgan Chase & Co. Ramchandani was the former managing director and head of G10 FX spot trading at an affiliate of Citicorp. Ashton was head of Spot FX at an affiliate of Barclays PLC.

Ongoing investigation. The Justice Department noted that a total of six individuals have been charged so far in the FX investigation. On January 4, the government announced that Jason Katz, a dealer of Central and Eastern European, Middle Eastern, and African (CEEMEA) currencies on the New York FX desks of three successive financial institutions, had pleaded guilty to participating in the FX conspiracy. Katz agreed to cooperate in the government’s ongoing investigation. In July 2016, fraud charges were brought by the Department of Justice Criminal Division against two FX executives for conspiring to defraud a client of their bank through a front running scheme.

Four major banks–CiticorpJPMorganRBS, and Barclays– pleaded guilty in 2015 at the parent level and agreed to collectively pay more than $2.5 billion in criminal fines for their participation in the conspiracy to manipulate the price of U.S. dollars and euros exchanged in the FX market. They were sentenced in the federal district court in Bridgeport, Connecticut, on January 5. A fifth bank, UBS, pleaded guilty to manipulating the London Interbank Offered Rate (LIBOR) and other benchmark interest rates and agreed to pay a $203 million criminal penalty, after breaching its December 2012 non-prosecution agreement resolving the LIBOR investigation.

"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," said Principal Deputy Associate Attorney General and former antitrust chief Bill Baer. "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."

Office of the Comptroller of the Currency action. The Office of the Comptroller of the Currency (OCC) separately announced fines against Usher and Ramchandani. The OCC issued a notice of charges for prohibition and notice of assessment of civil money penalty against the two individuals, fining Usher and Ramchandani $5 million each.

Companies: Barclays PLC; Citicorp; JPMorgan Chase & Co.; Royal Bank of Scotland PLC; UBS PLC

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