Manhattan - Jason Katz, a former Barclays currency
trader, admitted conspiring to fix prices in the foreign-exchange market, the
third individual to be charged and the first to plead guilty in a long-running
US criminal investigation into the rigging of currency rates.
Katz appeared in Manhattan federal court Wednesday, where
he admitted to participating in a conspiracy with other bankers to manipulate
emerging-market currency trades while working at three different financial
institutions from 2007 to 2013.
Katz’s conviction comes one day before five banks are
scheduled to be sentenced in connection with the Justice Department’s
three-year investigation. The banks - Citigroup, JPMorgan Chase & Company,
Barclays and Royal Bank of Scotland Group - pleaded guilty in May 2015 to
charges that their traders conspired to manipulate trading in U.S. dollars and
euros. UBS Group also pleaded guilty to a related charge.
Bloomberg previously reported that the currency-rigging
investigation had expanded to additional chatrooms involving trading in
emerging market currencies, including the Brazilian real, the Russian ruble
and the South African rand.
Trading history
Katz spent a year as director of emerging markets-foreign
exchange trading at Barclays beginning in 2010, according to regulatory filings
and his LinkedIn profile. He joined BNP Paribas in September 2011 as its
director of emerging markets-foreign exchange trading, before leaving for
Australia & New Zealand Banking Group two years later, the documents show.
Before joining Barclays, Katz spent more than nine years at Standard Bank,
where he was head of foreign exchange, according to his LinkedIn profile.
Prosecutors say Katz was a dealer of central and eastern
European, Middle Eastern and African currencies and conspired to manipulate
prices through "non-bona fide trades," coordinating the placement of
bids and offers, and agreeing on currency prices they would quote specific
customers.
Katz has agreed to cooperate with the government’s
investigation. The conspiracy charge Katz admitted to has a maximum penalty of
10 years in prison and a $1 million fine, which may be increased based on the
proceeds gained or the loss to investors.
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“These conspirators engaged in blatant collusion and
succeeded in manipulating exchange rates for multiple currencies to their
advantage,” said Brent Snyder, a deputy assistant attorney general with the
department’s antitrust division. “Conspiracies such as this undermine the
integrity of our financial markets, and the Antitrust Division is committed to
ensuring that they are pursued and punished.”
Currency chats
Katz’s time at Barclays coincides with that of Chris
Ashton, the former global head of spot trading at the London-based
bank. Prosecutors have been investigating allegations that Ashton and a
group of other traders participated in an electronic chatroom called The Cartel
where they conspired to rig currency prices.
Ashton was permanently banned from US banking by the US
Federal Reserve in August. It isn’t clear whether Katz had any interaction with
Ashton or other members of The Cartel.
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Those chatroom discussions formed the basis of guilty
pleas by four of the banks, which are scheduled to be sentenced Thursday in
Connecticut. Barclays, JPMorgan and Citigroup provided evidence of a potential
new antitrust conspiracy in the currency spot market that prosecutors say
involves different currencies than the ones at the centre of their 2015 guilty
pleas.
BLOOMBERG