Daily Archives: May 21, 2015

Bank punishment ‘won’t change anything’: Lawyer

Punishments leveled on international banks involved in foreign exchange rate manipulation “won’t change anything,” an attorney said Wednesday.

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Euro dollar traders at four of the banks described themselves as members of “The Cartel” and used an electronic chatroom and coded language to manipulate exchange rates to increase profits, the agency said.

The settlement will fail to prompt change because the individuals who manipulated markets will not face charges themselves, said Marc LoPresti, founding partner of LoPresti Law Group.

“It’s no secret who the wrongdoers were,” LoPresti said in a CNBC“Closing Bell” interview.

Read on.

Overheard In The FX Rigging “Cartel” Chatroom: “Mess This Up And Sleep With One Eye Open

As promised, the Justice Department has extracted guilty pleas in FX rigging cases involving JP Morgan, Citi, RBS, and Barclays and as we said twice last week and once this morning, the banks received waivers which ensured that none of the penalties that should rightfully be associated with those pleas will actually apply to the banks.

What do traders say to one another when conspiring to rig a $5 trillion-a-day market you ask?  Here are some examples from the Barclays consent order:

One particular chat room, referred to by the participating traders and other traders as the “Cartel” included FX traders from Citigroup, JP Morgan, UBS, RBS and Barclays who specialized in trading the Euro.

One Barclays FX trader, when he became the main Euro trader for Barclays in 2011, wasdesperate to be invited to join the Cartel because of the trading advantages from sharing information with the other main traders of the Euro. After extensive discussion of whether or not this trader “would add value” to the Cartel, he was invited to join for a “1 month trial,” but was advised “mess this up and sleep with one eye open at night.”

On one occasion, a Barclays FX trader explicitly discussed with a JP Morgan trader coordinating the prices offered for USD/South African Rand to a particular customer, stating, in a November 4, 2010 chat, “if you win this we should coordinate you can show a real low one and will still mark it little lower haha.” After the JP Morgan trader suggested that they “prolly shudnt put this on perma chat,” the Barclays trader responded “if this is the chat that puts me over the edge than oh well. much worse out there.” 

On June 10, 2011, the Barclays trader stated explicitly in another chat that “we trying to manipulate it a bit more in ny now . . . a coupld buddies of mine and I.”

As the future Co-Head of UK FX Hedge Fund Sales (who was then a Vice President in the New York Branch) wrote in a November 5, 2010 chat: “markup is making sure you make the right decision on price . . . which is whats the worst price i can put on this where the customers decision to trade with me or give me future business doesn’t change . . . if you aint cheating, you aint trying.”

Read on.

Fired JPMorgan Exec Says Integrity Cost Him

PHILADELPHIA (CN) – JPMorgan Chase & Co. fired and defamed a top-level executive because he refused to scuttle the settlement of a housing-discrimination case on its way to the U.S. Supreme Court, he claims in court.
Mt. Holly Citizens in Action Inc. v. Township of Mount Holly stemmed from a plan by a New Jersey city to replace existing homes in a heavily minority, low-income neighborhood with significantly more expensive units.
Before a November 2013 settlement killed its consideration of the case , the Supreme Court was preparing to decide whether disparate-impact claims are cognizable under the Fair Housing Act.
Wayne Trotman, a Harvard and Oxford-educated former executive at JPMorgan, says the banking industry had a lot riding on that issue, since the high court could use the case to strike down a federal housing regulation “based on the theory that the Obama administration was aggressively using [it] to help poor minorities obtain equal lending opportunities.”
Trotman figured into the Mt. Holly case though his role as director of The Reinvestment Fund, a nonprofit that offered to underwrite the settlement of the Mt. Holly litigation, according to his complaint in the Philadelphia County Court of Common Pleas. JPMorgan allegedly employed Trotman as its president and CEO of its “middle market business in the Mid-Atlantic market” since 2011.
Suing JPMorgan for wrongful discharge, Trotman says his employer had been receptive to a “call to arms” issued that fall by Tim Pawlenty, the former governor of Minnesota making a name for himself as a banking lobbyist who sought “a delay in the decision to fund the [Mt. Holly] settlement.”
Pointing to the fiduciary duty he owed The Reinvestment Fund, Trotman allegedly “protested and refused to carry out senior-management directives to abuse his position … to scuttle [the] settlement.”

Read on.

Wall Street Doesn’t Want Senate’s ‘Rollbacks’ for Wall Street

A U.S. Senate bill to ease rules for some banks has drawn fire as a giveaway to Wall Street, even on the presidential campaign trail. But to this giveaway, the biggest U.S. banks are saying, “No, thanks.”

Last week, the Republican leader of the Senate Banking Committee pitched the most significant overhaul of the Dodd-Frank Act since the legislation’s 2010 enactment. Democrats responded by calling the proposal a “Wall Street deregulation package” that amounts to an industry wish list.

Those who work for mega-banks and represent them say that this wish list has nothing they’d ask for, and could instead bring headaches.

“The very largest banks are the one group that got nothing in this bill,” said Francis Creighton, executive vice president for government affairs at the Financial Services Roundtable. He called the attempt to link the bill to Wall Street “farcical.”

A key proposal in Senator Richard Shelby’s legislation could free about two dozen mid-size lenders from the toughest and most costly burdens of Dodd-Frank, including requirements that they undergo annual stress tests and hold big capital cushions.

Citigroup Competition

Such a change would probably prove advantageous for banks including U.S. Bancorp and PNC Financial Services Group Inc. in instances where they might try to compete with the likes of Citigroup Inc. for domestic business.

Shelby’s bill also gives bank bashers on Capitol Hill a fresh opportunity to criticize the industry and pursue agendas that could hurt Wall Street, according to interviews with bank executives and lobbyists who asked not to be named because they weren’t authorized to speak publicly.

Senator Elizabeth Warren, a Massachusetts Democrat, has already proposed legislation with Louisiana Republican David Vitter that would curtail the ability of Goldman Sachs Group Inc. and Morgan Stanley to own commodities. The lawmakers also teamed up to propose limits on the Federal Reserve’s ability to lend money to banks during a crisis. Both ideas could reemerge as amendments to Shelby’s bill as it moves through the Senate.

Read on.

NY financial watchdog Ben Lawsky leaving to start firm

Wall Street can breathe a little easier.

Benjamin Lawsky, New York’s top financial watchdog who earned a reputation as tough on big banks, will step down as head of the state Department of Financial Services next month to start his own legal consulting firm.

Lawsky, 45, who was appointed by Gov. Andrew Cuomo four years ago as the first superintendent of the newly created agency, plans to advise companies on financial matters such as cybersecurity and digital currencies like bitcoin, a new sphere of regulation he helped spearhead in New York.

Rumors have swirled since December that he was headed to a white shoe law firm, with the expectation that he would land a job advising the same banks he was regulating.

By starting his own firm, Lawsky may sidestep criticism that he’s going through the “revolving door.” He will not work for companies regulated by the DFS, according to a person close to Lawsky, although that wouldn’t prevent him from working for some bank clients.

Read on.

Busted! Banking Cartels admit guilt, fined $5B to settle foreign currency probe

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The banking “cartel” is busted.

JPMorgan Chase, Citigroup, Barclays and Royal Bank of Scotland on Wednesday agreed to plead guilty to manipulating global currency markets and will pay more than $5 billion in fines.

The Department of Justice also ripped up a deferred prosecution agreement with UBS for violating the terms of an earlier settlement tied to rate-rigging.

Traders from the five banks, who dubbed themselves “the cartel,” were part of a chat room group that colluded to manipulate exchange rates and rip off clients.

The extent of the fraud was widespread and affected rates around the world, federal prosecutors said Wednesday.

“This Department of Justice will vigorously prosecute all of those who tilt the economic system in their favor,” US Attorney General Loretta Lynch said during a news conference.

Barclays paid the biggest penalty of $2.4 billion to UK and US regulators, including the DOJ, the Federal Reserve and New York’s Department of Financial Services. The Britain-based bank, which also fired eight employees, was at the center of much of the rigging, regulators said.

“If you aint cheating, you aint trying,” one Barclays trader said, according to transcripts of the chat room messages.

The Barclays employees used tough-guy language and even had an initiation process, prosecutors allege.

Overall, six banks will pay nearly $6 billion in penalties. Citi ($1.27 billion), JPMorgan ($892 million) RBS ($669 million) and UBS ($545 million) paid fines and pleaded guilty to charges. Bank of America will pay $205 million without admitting guilt.

Read on.

Another Nationstar executive stepping down

For the second week in a row, a high-level executive Nationstar Mortgage Holdings (NSM) is resigning.

Last week, Nationstar announced that its president and chief operating officer, Harold Lewis, informed the company that he intends to retire and will resign from his positions, effective May 31.

Nationstar announced Wednesday that David Hisey, who served as executive vice president, chief strategy and external affairs officer, informed the company that he is resigning, effective at the close of business on June 19, 2015.

Hisey’s resignation was disclosed in a filing with theSecurities and Exchange Commission.

According to Hisey’s bio on Nationstar’s website, he has held the positions of executive vice president, chief strategy and external affairs officer since May 2014.

Read on.