DOJ Treasury Probe to Examine Trader Communications

June 25th, 2015

The Department of Justice (DOJ) announced its new investigation into alleged manipulation in the more than $12 trillion Treasurys market in early June.  Media reports suggest that the investigation is still in the very early stages. Currently, only three banks have come into the scope of the probe, but there are 22 total primary Treasury dealers in the market.  The DOJ has yet to comment on the state of the investigation.

Traders are suspected of fraudulently sharing and leveraging confidential information about clients’ Treasury bids shortly before scheduled Treasury auctions. Reporting from Bloomberg earlier this week suggests that the DOJ may look to evidence of this misconduct in electronic trader conversations, within individual banks and across multiple banks.  This investigation comes right off the back of recent LIBOR settlements and foreign exchange (FX) probes, suggesting that collusive market manipulation has become a high regulatory and enforcement priority for financial regulatory agencies.

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