Citigroup, JPMorgan, RBS confirm forex probes

Kevin McCoy, USA TODAY 6:14 p.m. EDT November 1, 2013

The multinational probes of foreign exchange trading represents the latest investigation of crucial financial benchmarks that affect personal and business transactions worldwide.

Citigroup, JPMorgan Chase and Royal Bank of Scotland are the latest global banks confirming that their foreign exchange trading is under investigation.

In its third-quarter earnings report Friday, New York-based Citigroup said it had "received requests for information" from government agencies probing the issue and was "cooperating with the investigations and inquiries and responding to the requests."

JPMorgan Chase's quarterly filing also filed Friday said the New York-headquartered bank was cooperating with requests from "relevant authorities" about foreign exchange probes that are "in the early stages."

Similarly, Royal Bank of Scotland's third-quarter earnings statement said the bank had received inquiries about the trading from several governmental and regulatory authorities, including Great Britain's Financial Conduct Authority.

RBS said it "is reviewing communications and procedures relating to certain currency exchange benchmark rates as well as foreign exchange trading activity and is cooperating with these investigations."

RBS also listed the foreign exchange investigation and other trading probes as risk factors that could materially affect its future financial results. The statement said at this stage, the bank "cannot estimate reliably what effect, if any, the outcome of the investigation may have."

British banking giant Barclays, UBS, Switzerland's largest bank, and German banking giant Deutsche Bank previously made similar disclosures to investors about the foreign exchange investigations.

The U.S. Department of Justice on Tuesday confirmed it had "an active, ongoing investigation into possible manipulation of foreign exchange rates" by traders at several banks. Swiss authorities are also investigating.

At least in part, the probes are believed to focus on suspicion that traders at several banks may have colluded via electronic messages and used inside knowledge about large trade orders placed by clients to manipulate rates. Investigators are also believed to be examining whether traders attempted to influence benchmark foreign exchange rates reported by WM/Reuters by submitting trades during the times when those rates are set.

Many money managers, pension funds and other institutional investors rely on the WM/Reuters rates for foreign exchange investments.

The foreign exchange investigations represent the latest multinational examination of financial benchmarks that affect trillions of dollars in personal and business transactions. Investigators are also probing evidence that bank traders manipulated the London Interbank Offered Rate, which is used to set rates on mortgages, credit cards, loans and some financial derivatives.

RBS' financial statement also cited the Libor investigations as a potential risk factor that could affect its financial results.

The bank, chiefly owned by the British government following a financial bailout, also announced Friday that it would shift approximately $61 billion in bad loans into a newly created internal entity.

The goal behind creation of the so called "bad bank" is to remove 55% to 70% of those assets over the next two years and thus speed up an overhaul of operations and improve the overall bank's financial health, according to the RBS financial statement.

"The bar has been set at a higher level for RBS than for other UK banks because we were rescued at the public's expense," said bank CEO Ross McEwan in announcing the effort to return money to taxpayers.

RBS shares closed down nearly 8% at $10.85 in Friday trading. Citigroup shares closed down fractionally at $48.74. And shares of JPMorgan Chase closed up nearly 2% at $52.51.

Wednesday we reported that another JP Morgan banker has been found dead, as the latest banker to meet a sudden and untimely demise is Ryan Henry Crane, the Executive Director in JPMorgan’s Global Equities Group.
Today, Steve Quayle’s banker source “V”, who predicted that a wave of banker hits was imminent when the very first bankers began dropping last week, has dropped a bombshell regarding the death of Ryan Henry Crane.
V states that Crane oversaw all of the trade platforms and worked closely with Gabriel Magee of JPM’s London desk (who fell 32 stories off the JPM London roof moments after texting his g/f he would be home shortly), and that the pair had access to the exact same info.
V concludes Crane & Magee: “Knew each other and had uncovered something“.
V’s update on the latest JPMorgan banker to turn up dead is below:

From Steve Quayle’s banker source “V”

One other thing he was the head at the program trading desk. Meaning he over saw all of the trades and was familiar with all of the software (trade platforms) that these trades were done in. This job works closely with guess what? That’s right the London desk and who died last week in London? That’s right Gab$7.77 Shippingriel Magee the one who jumped off the 33rd floor. What was his post? Head of IT and trade platforms meaning he had access to info that Ryan Henry Crane would have.

They knew each other and uncovered something- they were about the same age and these hits happen when two big announcements by JPM.
1. They are out of commodities, and
2. The wholesale selling of their HQ downtown to the Chinese.

“V” The Guerrilla Economist
V’s claim aligns with what Jim Willie’s sources informed SD readers on the recent rash of banker deaths, that we are witnessing bankers taken out who are on the verge of revealing BIG DATA details on FOREX fraud.

Jim Willie’s exclusive update for SD readers on what is going down with the sudden spree of banker “suicides” can be read here:
Jim Willie on Bankster Suicides: Bankers Were Taken Out to Prevent FOREX Fraud Whistle-blowing!

Posted on March 9, 2014 by The Doc


Yesterday we reported that Steve Quayle’s banker source “V” has informed him that the recent rash of banker “suicides” are part of a hit list that includes dozens of bankers including a supposed high level Citi executive.
Today, none other than Jim Willie himself has provided SD readers with an exclusive report on the banker deaths, which has now increased to 5 in the past week with American Title CEO Richard Tulley found dead of “self-inflicted nail gun wounds“.
The Golden Jackass states that the suicided bankers had flipped during prosecution investigations, and were assassinated to prevent insider testimony of bank fraud from reaching the prosecution.
Willie, who recently sat down with The Doc for an exclusive interview revealing the “Smoking Gun” proving gold rehypothecation by US officials, emphasizes that we are NOT seeing bad bankers removed, we are witnessing bankers taken out who are on the verge of revealing BIG DATA details.

Willie’s full alert on Wall Street banker suicides is below:
From Jim Willie, 

The banker hits are being done by the bad guys to keep men from singing after they flipped during prosecution investigation.

All have been working with police teams and continental cops like Interpol.

The STL Fed guy discovered some Bush giant multi-$B fraud and was ready to report it.

The STL Fed economist was hit by the Bush gang, before he sang against them.

The London bankers had begun to sing to Interpol on Mafia Vatican connections on massive FOREX fraud thefts.

It is unclear which is bigger: Vatican links to narco money, or links to FOREX fraud theft, or their control room for Nazis.


Forex Investigation

An international investigation of Forex markets is taking place led by the U.S. Department of Justice, the UK Financial Conduct Authority, and authorities in the European Union. As a result investment banks like UBS are reshuffling their foreign exchange trading operations and taking top level managers off their jobs. Removal of those at fault for collusion in the exchange markets is a good thing but some fear that this is merely a means of sweeping dirty dealing under the rug. Many major banks are under a watchful eye as the investigation proceeds. Banks have fired those likely at fault and are hiring lawyers to represent them as each individual Forex investigation proceeds. Many have worried over the years about a Forex conspiracy. Usually these worries have to do with governments and shadowy figures with untold riches. In this case the emerging Forex conspiracy may simply have to do with greed. For the average trader the issue is one of beating the Forex conspiracy. With all of the wealth and power of large investment banks on one side what does the average trader do to beat the Forex conspiracy?

True Fundamentals or a Hall of Mirrors

At issue when nations conspire to manipulate currency rates is the accuracy of Forex fundamentals. Central banks make pronouncements that drive the market. They may or may not follow through. To a degree this is a Forex conspiracy. Traders must be cautious and read between the lines. The better approach is to simply rely on trade figures, employment data, and other hard data that drive Forex pricing.

Investment Bank Manipulation of the Forex Market

Technical analysis of Forex currencies is a mainstay of trading foreign currencies. Accurate technical analysis is based on the fact that price action in a free and open market tends to repeat itself. Statistical analysis of price patterns can predict where the market is going next. This works unless major players in the Forex markets collude. Then 1 plus 1 does not equal 2 and the average trader takes a loss or two or three. The ongoing Forex investigation has already picked up evidence of collusion between high level managers and traders at several major investment banks. The Forex investigation tells us that these folks did not necessarily want to hurt your chances of turning a profit in the Forex markets but apparently colluded in attempts to minimize losses and increase profits on their own turf. The Forex investigation tells us that traders communicated back and forth and agreed to how they would sequence their orders. This creates a set of pricing patterns in the market that is not the result of a free and open market. Technical analysis does not work if someone is manipulating price patterns. Trade in smaller amounts and if the market makes no sense sit on your hands!

A Matter of Trust

The really scary part here is that traders who used to make money in trading Forex might be tempted to send their trades to someone else to execute because obviously those investment banks are doing it right and making money. The problem is that if you trust someone else to trade for you and that person is already engage in market manipulation there is no reason to believe that they will not simply use your capital to prime the market for their profitable trades. As the Forex investigation moves forward the issue for independent traders is the preservation of a free and independent market in which the standard signals or trading serve to make profits if properly used. As the market is cleaned up trading should be safe but in the meantime be aware of a conspiracy by traders to manipulate market pricing.

Forex fraud: Now it's getting serious
By Alanna Petroff @AlannaPetroff July 21, 2014: 12:27 PM ET


The U.K. launched a wide-reaching criminal investigation Monday to catch people who may have manipulated the foreign exchange market.

London is the world's largest trading hub for foreign currencies -- a market worth roughly $5.3 trillion a day.
Financial regulators around the world have been looking into the issue, with internal and external probes involving UBS (UBS), Deutsche Bank (DB), Barclays (BCS) and the Royal Bank of Scotland (RBS), among others.

The new investigation by the U.K. Serious Fraud Office is specifically focusing on individuals working in banks and financial institutions, and is being conducted in partnership with the U.S. Department of Justice.

Related: The guy who tried to rig gold prices and cost his bank $44 million
In March, an employee of England's central bank was suspended in connection with the possible manipulation of the global currency market.

The Bank of England suggested the employee may not have followed its "rigorous internal control processes," however, it said an internal investigation had not turned up any wrongdoing.
There have also been probes into the fixing of the London Interbank Offered Rate, or Libor -- a benchmark used to set everything from student loan rates to mortgage rates. Banks have been fined billions and traders have faced criminal charges as a result.

Forex and LIBOR, the foxes policing the door to the hen house.

Ex-Barclays bankers charged with Libor rigging
By Mark Thompson @MarkThompsonCNN  February 17, 2014: 9:56 AM ET

Prosecutors have charged three former Barclays bankers in connection with the rigging of global interest rates.

The U.K.'s Serious Fraud Office, which prosecutes complex cases of fraud, said Monday that it's started criminal proceedings against Peter Charles Johnson, Jonathan James Mathew and Stylianos Contogoulas in connection with manipulating the London interbank offered rate, or Libor.
All three have been charged with conspiring to defraud between June 2005 and August 2007.

The scandal began in the middle of 2012, when Barclays (BCS) admitted to manipulating Libor, which together with related rates is used as a benchmark for trillions of dollars of financial products around the world.

The U.K.-based bank declined to comment.

Barclays paid more than $450 million in 2012, as part of a settlement with U.S. and U.K. regulators. Other big banks have also paid hefty penalties for their role in the scandal, which so far has cost the industry about $6 billion.

The SFO had previously brought Libor-related charges against former UBS (UBS) and Citigroup (C) banker Tom Hayes, along with Terry Farr and James Gilmour, who both worked for brokerage RP Martin. All three have pleaded not guilty.

The U.K. probe is running parallel to an investigation by the U.S. Department of Justice, which last year charged three former employees of U.K.-based brokerage ICAP (IAPLY) with actions related to Libor rigging. The U.S. has also indicted Roger Darin, another former UBS employee.

Related: Bigger than Libor? Forex probe hangs over banks

U.S. government-backed Fannie Mae (FNMA) sued nine banks in October, arguing it lost money on mortgages and interest rate swaps when Libor rates were set artificially low. U.S. law firms are also leading civil actions on behalf of investors who claim they lost out due to the market manipulation.

Regulators and legal authorities continue to pursue other individuals and banks.

The European Commission said in December that it was still going after HSBC (HBCYF), Credit Agricole (CRARF), JP Morgan (JPMPRD) and ICAP.

First Published: February 17, 2014: 9:56 AM ET

In furtherance of its strategy to shed international operations, Citigroup Inc. (C - Analyst Report) is eyeing the sale of its retail banking operations in Japan. It has been rumored that the U.S.-based bank has approached around 10 financial institutions, which include Japan's top three lenders and regional banks.

However, Citigroup offering retail services in Japan for a century with 33 branches in the country would retain its commercial and investment banking operations. Aimed at increasing the efficiency of the company’s overall business, the initiatives include streamlining operations and optimizing footprints across geographies.

Regulatory pressure over Citigroup’s global operations and concerns of weak loan demand along with reducing interest margins surrounding Japan's banking industry forced the bank to take such a move. Though recently lending has increased, deposits still beats loans balances, following the cautious nature of businesses and households on spending.

As of Jun 30, 2014, Citibank Japan held total deposits of about ¥3.9 trillion ($38 billion). Moreover, Citibank Japan recorded a loss of ¥910 million during the second quarter as compared with the profit of ¥629 million in the prior-year period. Therefore, as part of its cost-cutting measures, Citigroup planned to vend its unprofitable retail business in Japan.

Over the past few years, Citigroup has been involved in a number of divestitures and restructurings in its Japan operations. Since 2004, Citigroup has been under regulatory pressure to restructure its Japanese operations, when it was forced to shut down its private banking business in Japan, following inadequate money laundering controls.

Citigroup has been under the scrutiny of Japanese regulators due to its lack of communication. Moreover, Japan’s main banking regulator, the Financial Services Agency (FSA), which had ordered Citigroup to suspend business in 2011, also forced Citibank’s Japan chief executive – Darren Buckley at that time, to step down as the company failed to disclose the level of risks of some financial products such as investment trusts to clients while they were sold.

Therefore, FSA was open to investigate Citigroup's Japan units on a regular basis to keep an eye on internal controls, business model and financial-product sales structure improvement.

Similar Moves by Other Banks

In 2012, as part of its restructuring of global operations, HSBC Holdings plc (HSBC - Analyst Report) started reducing private banking in Japan and finally closed down all six of its remaining Japanese branches in July.

Further, Societe Generale divested its wealth management unit in Japan to SMBC in Jul 2013. It followed Bank of America Merrill Lynch’s move to permit Mitsubishi UFJ Financial Group, Inc. (MTU - Analyst Report) to take over the private banking joint venture completely, which was announced in 2005. Notably, Bank of America Merrill Lynch is a unit of Bank of America Corporation (BAC - Analyst Report).

Our Viewpoint

Citigroup operates in numerous markets worldwide. Therefore, Michael Corbat after taking over Citigroup’s Chief Execution Officer (CEO) in 2012 planned to restructure, reduce or exit some of the operations in 21 markets globally to enhance returns. Though names of such markets were undisclosed, it was intimated that most of these involve consumer businesses.

Since then, Citigroup announced its plans to exit consumer businesses in countries including Honduras, Turkey, Romania, Uruguay and Paraguay. Recently, the bank agreed to vend its consumer-banking businesses in Greece and Spain.
Amid troubled tides, while Citigroup is encountering issues from various fronts including the ongoing investigations related to the Mexican fraud and the Federal Reserve’s rejection of its 2014 capital plan, the deal will give the company some financial flexibility.

On the capital front, Citigroup does not intend to resubmit its 2014 Capital Plan. However, the company is working to improvise the loopholes of the plan and is preparing for the 2015 Capital Plan.

We believe the company is well positioned to resolve its internal inefficiencies and setbacks. Further, we believe these streamlining initiatives will bolster the company’s capital position, reduce expenses and drive operational efficiencies.
Citigroup currently carries a Zacks Rank #3 (Hold).
NEW YORK (TheStreet) -- After a dismal first half of the year with continued litigation for some banks, economic weakness in Europe and geo-political tensions in the Middle East and Russia, the European banks have taken it on the chin and so have their investors. The iShares MSCI Europe Financials (EUFN) , a broad-based European financials ETF, is down almost 3% for the year, but down almost 9% from its high on June 6. The fund's holdings include: HSBC Holdings (HSBC_) , Banco Santander (SAN_) , Lloyds Banking Group (LYG_) , BNP Paribas BNP, UBS (UBS_) , Barclays (BCS_) and many others.

Compare this to the most popular U.S banking index -- the Financial Select Sector SPDR ETF (XLF) , with holdings in Wells Fargo (WFC_) , JPMorgan Chase (JPM_) , Bank of America (BAC_) , Citigroup (C_) and others -- is up 7% for the year and is currently trading at its year-to-date high and up almost 14% off the lows from February 2014. The chart below summarizes the year-to-date performance of the two funds:

Read More: 7 Stocks Warren Buffett Is Selling in 2014

Forex investigation

21 July 2014

The Director of the Serious Fraud Office has today opened a criminal investigation into allegations of fraudulent conduct in the foreign exchange market.

Notes to editors:
1.The Serious Fraud Office is an independent government department responsible for investigating and prosecuting serious and complex fraud, bribery and corruption. It is headed by the Director, David Green CB QC, who exercises powers under the superintendence of the Attorney General. These powers are derived from the Criminal Justice Act 1987.
2.Please contact SFO Press Office on 020 7239 7004 / 7316 / 7000,  or visit