Bloomberg Interview Suggests FX Investigations Expanding to Sales Practices
Today Bloomberg released an article discussing recent developments in United States (US) foreign-exchange market investigations currently being conducted by the Department of Justice (DOJ), the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC) and the New York Department of Financial Services. US regulators are among several other entities across the European Union (EU) and Asia examining trader collusion and benchmark rigging in the currency markets. Other regulators considering or engaging in investigations include the United Kingdom’s (UK) Financial Conduct Authority (FCA) and Treasury, Switzerland’s Weko, Hong Kong’s Monetary Authority, and Germany’s BaFin.
The Bloomberg article cites two anonymous sources “with knowledge of the matter.” According to the interview, DOJ investigators have been questioning sales staff and traders employed by various financial institutions engaged in foreign exchange markets over the past two months. Some of the banks implicated in the investigation include Bank of America, Barclays, Citigroup, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan Chase, RBS and UBS. The Bloomberg sources allege that the DOJ is examining the practice of adding small markups to currency deals. If bank representatives failed to disclose these fees to clients, then they could be subject to fraud charges.
The expansion of the foreign exchange probe only serves to further widen the exposed areas at the banks under investigation. Given the broadening scope of domestic investigations and the nearly dozen global regulators examining this issue, the suspected banks likely face a long road ahead to resolving and settling foreign exchange allegations.