The U.S. Justice Department is taking a leading role in a global investigation into possible manipulation of the $5.3 trillion-a-day foreign exchange market, a department official said. Mythili Raman, acting head of the criminal division, said in an interview yesterday that the department’s criminal and antitrust divisions have an “active investigation” into possible manipulation of foreign exchange rates. She declined to name specific institutions under scrutiny or say when the probe began.
Bloomberg News reported Oct. 11 that the U.S. had begun a criminal investigation of currency-market rigging, according to a person familiar with the matter.
The U.S. is “taking a leading role” in the probe with respect to international enforcers scrutinizing possible exchange rate manipulation, Raman said.
European Union antitrust regulators, the U.K. Financial Conduct Authority, Switzerland’s Financial Market Supervisory Authority, or Finma, and the Swiss Competition Commission are also probing the foreign exchange market.
The regulators are reviewing alleged abuse of benchmarks used in markets from oil to interest-rate swaps
by the firms that play a central role in setting them.
In the currency probe, regulators are examining an instant message group used by senior dealers at firms including Barclays Plc (BARC)
, Citigroup Inc. (C)
, Royal Bank of Scotland Group Plc
and UBS AG (UBSN)
to outline details of their positions and client orders, as well as make trades before key benchmarks were set, two people with knowledge of the discussions have said.
The FCA said in June it was reviewing potential manipulation of exchange rates. That month, allegations that dealers at banks pooled information through instant messages and used client orders to move benchmark currency rates were reported by Bloomberg News.
Swiss regulators said earlier this month they were “coordinating closely with authorities in other countries as multiple banks around the world are potentially implicated.” The probes include alleged manipulation of ISDA fix, a benchmark in the $379 trillion market for interest-rate swaps
Earlier yesterday, Standard Chartered Plc (STAN)
was said to have put Matt Gardiner, one of its most senior foreign-exchange dealers, on leave as regulators probe possible manipulation in currency markets, according to a person with knowledge of the matter.
The allegations don’t relate to his work at Standard Chartered, said the person, who asked not to be identified because the move hasn’t been made public. He previously worked at Barclays and Zurich-based UBS and moved to Standard Chartered in September as assistant chief dealer of currencies in London
Gardiner didn’t immediately respond to an e-mail and a message left on his mobile telephone and officials at London-based Standard Chartered declined to comment.
Frankfurt-based Deutsche Bank AG (DBK)
and UBS have said they are conducting internal reviews of their foreign exchange practices and cooperating with authorities. Deutsche Bank has declined to comment on the U.S. probe. RBS, based in Edinburgh, said Oct. 16 it is cooperating with the FCA. Officials at London-based Barclays and Citigroup, based in New York, have declined to comment on discussions among traders