U.S. Investigates Currency Trades by Major Banks [View all]

[Newsjock]

Source: New York Times

From their desks at some of the world’s biggest banks, traders exchanged a series of instant messages that earned them the nickname “the cartel.”

... If those suspicions are correct, the group of traders shared a mission to alter the price of foreign currencies, the largest and yet least regulated market in the financial world. And ultimately, they flooded the market with trades that potentially raised the cost of currency for clients but aided the banks’ own investments.

Now the instant messages, along with similar activity among other traders, are at the center of an international investigation into banks like Barclays, the Royal Bank of Scotland and Citigroup, according to recent public disclosures by the banks and interviews with investigators who spoke on the condition of anonymity. The investigators secured the cooperation of at least one trader, a development that has not been previously disclosed.

Although the investigation is at an early stage, authorities are already signaling the likelihood of a legal crackdown. “The manipulation we’ve seen so far may just be the tip of the iceberg,” the United States Attorney General, Eric H. Holder Jr., said in a rare interview discussing an active investigation. “We’ve recognized that this is potentially an extremely consequential investigation.”

Read more: http://dealbook.nytimes.com/2013/11/14/u-s-investigates-currency-trades-by-major-banks