Articles Tagged with Forex trading

The US Federal Reserve is ordering HSBC Holdings PLC (HSBC) to pay a $175M fine, accusing the bank of engaging in practices that were “unsafe and unsound” in its foreign exchange trading business. According to the Fed, HSBC did not properly oversee chat rooms in which traders exchanged information about investment positions.

The authorities contend that the bank’s traders exchanged confidential information about client orders and coordinated trades to enhance profits. As part of the securities enforcement action, HSBC will have to improve its controls and compliance risk management as it pertains to FX Trading.

Ex-HSBC Forex Spot Trader Head Accused of Front Running
In a different case, Mark Johnson, the former head of HSBC’s foreign exchange cash trading desk, is on trial over allegations of “front-running” involving forex spot trading. He and co-conspirator Stuart Scott have been charged with wire fraud and conspiracy for allegedly defrauding Cairn Energy PLC in a multi-billion dollar transaction that occurred in 2011. Front-running involving forex markets usually refers to the making of a trade that is proprietary prior to a customer making a potentially market-moving trade in order to profit.

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Former Citigroup Global Markets Traders Accused of Spoofing Arrive at Non-Prosecution Deals
The US Commodity Futures Trading Commission has reached non-prosecution agreements with three ex-Citigroup Global Markets Inc.(C) traders. Daniel Liao, Jeremy Lao, and Shlomo Salant admitted to engaging in spoofing in US treasury futures markets while working for the firm. The three of them also provided information about misconduct that was committed by others.

According to the non-prosecution deals, each trader submitted big orders on the opposite of orders that were smaller with the intention of cancelling the bigger orders. They engaged in spoofing to fill their smaller orders at prices they preferred.

The agreements with the ex-Citigroup traders comes nearly six months after the bank settled with the CFTC allegations over spoofing and supervisory-related deficiencies. A number of unlawful incidents at Citigroup were identified in the non-prosecutorial deals.

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Bloomberg is reporting that according to a source, JPMorgan Chase & Co. (JPM) has suspended currency dealer Gordon Andrew for alleged wrongdoing involving his work at Royal Bank of Scotland Group Plc. (RBS). According to The Wall Street Journal, people familiar with the matter say that the firm discovered evidence that Andrew disclosed trading data to employees of other banks. The forex trader does a lot of work converting huge amounts of euros into pounds at benchmark rates related to subsidies that the EU pays to British farmers every year.

Andrew began working for JPMorgan in October 2012 after Richard Usher, an RBS colleague, also switched to the firm. Usher was JPMorgan’s chief currency dealer in London until 2013 when he was put on leave during a global probe into foreign exchange market manipulation. He left the firm the following year. Regulators in the U.K. and the U.S. have since fined JPMorgan $1 billion related to the rigging probe. RBS was ordered to pay a $634 million fine.

Today, the WSJ reported that the probes into currency market manipulation have led to new signs of possible wrongdoing. Sources tell the newspaper that JPMorgan has even put aside another $900 million to cover investigation-related costs as well as legal bills. Meantime, broker-dealer Tullett Prebon PLC (TLPR) has started an internal review into its currency market practices. One of its brokers was allegedly referred to as a trade conduit in one chat room. That broker still works for the firm. In 2014, British fraud prosecutors charged an ex-Tullet broker with assisting other bank traders in manipulating trades.