Currency Probe Ensnares HSBC as Top Firms Discipline Employees

Jan 17, 2014 7:00 pm ET

Jan. 18 (Bloomberg) -- The world’s seven biggest currency traders have fired, suspended or put employees on leave as officials probe alleged foreign-exchange benchmark manipulation.

HSBC Holdings Plc suspended two London-based foreign- exchange traders, according to a statement yesterday. Citigroup Inc. put two spot traders who specialized in G-10 currencies on leave, according to a person with knowledge of the matter who asked not to be identified because the matter is private.

That brings the total number of traders known to be fired, suspended or put on leave to at least 17 since Bloomberg News reported in June that employees at some firms said they shared information about their positions with counterparts at other banks to try and manipulate the WM/Reuters rates, a key benchmark in the $5.3 trillion-a-day currency market.

The HSBC traders were the first to be suspended by the London-based lender as regulators in Washington, London and Switzerland investigate the market. The top seven banks account for about 70 percent of all currency trading, according to Euromoney Institutional Investor Plc.

Deutsche Bank AG has the biggest market share at 15.2 percent, followed by Citigroup with 14.9 percent, Barclays Plc at 10.2 percent, UBS AG with 10.1 percent, HSBC at 6.9 percent, JPMorgan Chase & Co. at 6.1 percent, and Royal Bank of Scotland Group Plc with 5.6 percent, according to the survey.

HSBC suspended London-based traders Edward Pinto and Serge Sarramegna, said a person with knowledge of the decision who asked not to be identified because the matter is private.

Deutsche Bank

Citigroup has put Anthony John in London and Andrew Amantia in New York on leave, according to another person with knowledge of the matter who asked not to be identified. None of the traders responded to e-mails and telephone calls seeking comment, while officials at their employers declined to comment.

Rohan Ramchandani, Citigroup’s head of European spot trading, was fired last week after being put on leave in October.

Deutsche Bank suspended several traders after combing through employees’ electronic communications using search terms negotiated with regulators late last year, a person familiar with the matter said this week. UBS suspended its co-chief dealer, Niall O’Riordan, while JPMorgan has put its chief dealer in London, Richard Usher, on leave. Edinburgh-based RBS has suspended foreign-exchange traders Paul Nash and Julian Munson. No individual or firm has been accused of any wrongdoing.

‘The Cartel’

At the center of investigations are instant-message groups with names such as “The Cartel,” “The Bandits’ Club,” “One Team, One Dream” and “The Mafia.” Their members exchanged information on client orders and agreed how to trade at the fix through the messaging platforms, five people with knowledge of the investigations said last month.

Traders on the chats say they were merely matching buyers and sellers ahead of the fix to minimize losses by avoiding trades at a time when prices typically fluctuate the most.

Still, many banks including Deutsche Bank, Citigroup, JPMorgan and Goldman Sachs Group Inc. have clamped down on the use of multi-bank instant-message groups.

Senior currency dealers raised the issue of how they communicate to officials at the Bank of England in April 2012, telling them about how they shared information about orders to reduce the risk of losses in the minutes before benchmarks are calculated, people with knowledge of the meeting said this week. The traders were concerned because regulators were scrutinizing instant messages in their investigations into rigging of the London interbank offered rate, the people said.

The Bank of England said it’s supporting the U.K. Financial Conduct Authority in its investigation into currency manipulation. In the U.S., the Federal Reserve is probing the matter, alongside the U.S. Justice Department. The European Union’s Competition Commission and Swiss Competition Commission are also investigating.

--Editors: Heather Smith, Edward Evans