NWMontana: Ex-Barclays Trader Admits Conspiracy to Rig Currency Prices
Jason Katz, a former Barclays Plc 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 U.S. 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. Separately, the Federal Reserve Board said it banned Katz from the banking industry.
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 Inc., JPMorgan Chase & Co., Barclays and Royal Bank of Scotland Group Plc — pleaded guilty in May 2015 to charges that their traders conspired to manipulate trading in U.S. dollars and euros. UBS Group AG 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.
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 Ltd. 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.
“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.”
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 U.S. banking by the U.S. Federal Reserve in August. It isn’t clear whether Katz had any interaction with Ashton or other members of The Cartel.
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 center of their 2015 guilty pleas.
The case is U.S. v. Katz, 17-cr-00003, U.S. District Court, Southern District of New York (Manhattan).
NWMontana: Rand Paul Reintroduces Legislation To “Audit The Fed”
Having been pursued, unsuccessfully, many times by his father in previous years, today Senator Rand Paul, together with Rep. Thomas Massie re-introduced legislation to “Audit the Fed”, after a similar effort stalled in the last Congress.
While in the past such a proposal, which has been vocally opposed by Janet Yellen and Wall Street for obvious reasons, was quietly shut down it may face its best odds ever of becoming law in the current Congress according to the Hill. With both chambers controlled by Republicans long critical of Fed’s policies, the legislation could end up being a test of Donald Trump stated resolve to putting the Fed to heel. In the past, the president elect has heaped scorn on the central bank, and demanded accountability from the “independent” Fed.
To that end, Paul specifically mentioned Trump in a statement about the bill Wednesday, making clear the measure’s proponents believe they have an ally in their cause coming to the White House.
“The U.S. House has responded to the American people by passing Audit the Fed multiple times, and President-elect Trump has stated his support for an audit. Let’s send him the bill this Congress,” said Paul.
Under the proposed bill, the Fed’s monetary policy deliberations could be subject to outside review by the Government Accountability Office. Proponents of the measure argue that the Fed is too powerful and lacks sufficient oversight for its interest rate decisions. But Fed officials from Yellen on down, as well as other critics, have warned that such a policy could subject the Fed to undue political pressure and discourage it from taking unpopular steps for the good of the overall economy.
While in the past, the proposal garnered bipartisan support and has passed the House several times in past Congresses, it usually stalled in the Senate. Senate Democrats refused to bring up the bill for consideration when they controlled the chamber, and senators rejected the bill in 2016 after it was brought up by the new GOP majority.
Two non-Republican senators — Bernie Sanders (I-Vt.) and Tammy Baldwin (D-Wis.) — voted for the measure then. Only one Republican, Sen. Bob Corker (Tenn.), opposed it. But the situation is different in 2017, as lawmakers who assumed President Obama would veto any “Audit the Fed” legislation in the past now are anticipating a White House with a vocal Fed critic at the helm. Furthermore, with Republicans controlling both chambers, any attempts to kill the bill will be more complicated.
During his presidential campaign, Trump frequently singled out the Fed, arguing during presidential debates that the institution was deliberately keeping interest rates low for Obama’s political benefit.
Fed officials are fiercely protective of their reputation as pursuing policies free of political motivation, and Yellen has shot down any notion of partisan intent in its policymaking. But lawmakers hoping to overhaul how the Fed does business see an opening in 2017.
“It is time to force the Federal Reserve to operate by the same standards of transparency and accountability to the taxpayers that we should demand of all government agencies,” said Massie.
Skeptics, however, note with Trump surrounding himself by numerous Wall Street scions in his new administration, and with the Fed an entity owned mostly by Wall Street (as Ben Bernanke’s former advisor infamous suggested last year when he said that “People Would Be Stunned To Know The Extent To Which The Fed Is Privately Owned”) it remains unlikely that any true change to the operational nature of the Fed will be implemented, especially if it gives Congress an upper hand over Wall Street in what to many is the most important decision-making process in the nation: setting the price of the money in general, and the US dollar in particular.