By Peter Reap, J.D., LL.M.
BNP Paribas USA has pleaded guilty to charges that it conspired to suppress and eliminate competition by fixing prices for European, Middle Eastern, and African currencies in violation of Section 1 of the Sherman Act, the Justice Department announced today (U.S. v. BNP Paribas USA, Inc., Case No. 1-18-cr—00061-JSR).
The conspiracy involved manipulation of prices on an electronic currency exchange (FX) trading platform through the creation of non-bona fide trades, coordination of bids and offers on that platform and agreements on currency prices to quote specific customers, among other conduct, according to the one-count information filed yesterday in the federal district court in New York City. The conspiracy consisted of a continuing agreement and concerted action among BNP Paribas USA and its co-conspirators: (1) to agree to enter into non-bona fide trades on an electronic foreign currency exchange trading platform for Central and Eastern European, Middle Eastern and African (CEEMEA) currencies, and then to cancel those trades; (2) to coordinate on the price, size, and timing of their bids; (3) to communicate in private chat rooms, emails, text messages, and private cell phone applications instead of recorded business phone lines; and (4) to employ measures to hide their coordinated conduct for the manipulation of currency prices.
"The Antitrust Division is committed to uncovering and prosecuting wrongdoing in all corners of the foreign currency exchange market, including this conspiracy affecting multiple emerging market currencies," said Makan Delrahim, Assistant Attorney General in charge of the Department of Justice Antitrust Division. "The Division’s investigation aims to root out and eradicate the manipulation that has plagued this industry."
"This guilty plea holds BNP Paribas accountable for its corrupt price-fixing behavior which violated the integrity of the financial services industry and undermined competition," said FDIC Inspector General Jay N. Lerner. "We are pleased to work with our law enforcement partners in combating this misconduct."
As part of its sentence, BNPP USA, the subsidiary of BNP Paribas S.A., has agreed to pay a criminal fine of $90 million. Both the government and BNPP USA have agreed to recommend no probation, in light of, among other factors, the bank’s substantial efforts relating to compliance and remediation. BNPP USA also has agreed to cooperate with the government’s ongoing criminal investigation into the FX market, and to report relevant information to the government.
BNP Paribas response. In a press release issued today, BNP Paribas stated that the conduct which led to this settlement occurred during the period from 2011 to 2013. Since this time, BNP Paribas has proactively implemented extensive measures to strengthen its systems of control and compliance, has increased resources and staff dedicated to these functions, conducted extensive staff training and launched a new Code of Conduct which applies to all staff. BNP Paribas USA became an intermediate holding company in July 2016 as required by Federal Reserve Regulation and at such time and thereafter elected the current independent directors, who had no role at BNP Paribas USA before July 2016. This settlement completes investigations into BNP Paribas’ foreign exchange business conducted by the Department of Justice, the New York State Department of Financial Services and the Board of Governors of the Federal Reserve System.
BNPP USA’s guilty plea follows the January 4, 2017, guilty plea of its former CEEMEA trader Jason Katz, and the January 12, 2017 guilty plea of a former CEEMEA trader from another financial institution, Christopher Cummins. In addition, on January 10, 2017, three individuals from other financial institutions – Richard Usher, Rohan Ramchandani and Christopher Ashton, were indicted for conspiring to fix prices and rig bids for U.S. dollars and euros.
BNPP USA is the sixth major bank to plead guilty as a result of the Justice Department’s ongoing investigation into antitrust and fraud crimes in the FX market. On May 20, 2015, four major banks—Citicorp, JPMorgan Chase & Co., Barclays PLC and The Royal Bank of Scotland plc, pleaded guilty at the parent level and agreed to pay collectively more than $2.5 billion in criminal fines for their participation in an antitrust conspiracy to manipulate the price of U.S. dollars and euros exchanged in the FX market. A fifth bank, UBS AG, pleaded guilty to manipulating the London Interbank Offered Rate (LIBOR) and other benchmark interest rates and agreed to pay a $203 million criminal penalty, after breaching its December 2012 non-prosecution agreement resolving the LIBOR investigation.
Companies: BNP Paribas USA; BNP Paribas S.A.
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