By Jeffrey May, J.D.
The Department of Justice has obtained its first plea agreement from an individual in its ongoing probe of price fixing in the foreign currency exchange (FX) market. The Justice Department announced yesterday that Jason Katz, a dealer of Central and Eastern European, Middle Eastern, and African (CEEMEA) currencies on the New York FX desks of three successive financial institutions, has pleaded guilty to participating in the conspiracy. A one-count information was filed in the federal district court in New York City on January 4 (U.S. v. Katz, Criminal No. 17 Crim. 003).
As part of this conspiracy, Katz and his co-conspirators manipulated prices on an electronic FX trading platform through the creation of non-bona fide trades, coordinated the placement of bids and offers on that platform, and agreed on currency prices they would quote specific customers, among other conduct, according to the Justice Department. Katz purportedly participated in the conspiracy from January 2007 until at least July 2013. The Justice Department did not identify Katz’s former employers. However, the Federal Reserve, in a statement announcing Katz’s permanent prohibition from working in the banking industry, disclosed that Katz had worked at Barclays PLC and later at BNP Paribas SA.
Katz has agreed to cooperate in the government’s ongoing investigation. The government will ask that the defendant’s cooperation be considered in sentencing. The maximum prison sentence for the challenged conduct is ten years.
Ongoing investigation. In 2015, four major banks–Citicorp, JPMorgan, RBS, and Barclays– pleaded guilty at the parent level and agreed to collectively pay more than $2.5 billion in criminal fines for their participation in the conspiracy to manipulate the price of U.S. dollars and euros exchanged in the FX market. Sentencing was scheduled for today in those cases in the federal district court in Bridgeport, Connecticut.
A fifth bank, UBS, 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. On July 20, 2016, fraud charges were brought by the Justice Department’s Criminal Division against two FX executives for conspiring to defraud a client of their bank through a front running scheme.
Attorneys: Benjamin Douglas Victor Sirota for Department of Justice. Robert Norman Knuts (Sher Tremonte LLP) for Jason Katz.
Companies: Barclays PLC; Citicorp; JPMorgan Chase & Co.; Royal Bank of Scotland PLC; UBS PLC; BNP Paribas SA
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