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Date Posted: 20:57:19 11/19/03 Wed
Wall Street forex traders face charges
By Jonathan Birchall and Vincent Boland in New York and Alex,Skorecki in London
Published: November 20 2003 4:00 | Last Updated: November 20 2003 4:00
US federal prosecutors yesterday charged 47 people after a probe into fraud in the New York foreign exchange market uncovered "a staggering array of criminal conduct".
Those charged include employees of JP Morgan Chase, Société Générale, UBS, Dresdner Kleinwort Wasserstein and Israel Discount Bank, as well as a former member of the New York Federal Reserve Bank's foreign exchange committee. Staff at several money brokers, including UK-based ICAP and Tullett Liberty, have also been charged.
The 18-month investigation, dubbed "Operation Wooden Nickel" culminated in a series of raids and arrests on Wall Street late on Tuesday.
James Comey, US district attorney, alleged that the probe uncovered two schemes in which leading banks and thousands of small investors were defrauded of "millions of dollars".
The alleged frauds are the latest blow to Wall Street, which is fighting to restore investor confidence following scandals over biased stock research and mutual fund trading abuses.
"Some of the world's biggest banks were scammed by corrupt players inhabiting every level of the forex interbank market," Mr Comey said in New York. He said the banks were targeted by corrupt currency traders who took pay-offs to steer their employers into losing currency trades set up by corrupt brokers.
The investigation suggested that these kinds of trades had "been going on far and wide for over 20 years".
Mr Comey said the other scheme resulted in more than a thousand small investors losing millions of dollars when they were conned "by classic boiler-room operations [in which high-pressure salesmen cold-call possible customers and promise huge returns on investments] with fancy sounding names" into supposedly investing in forex trades.
Shares in ICAP, which confirmed that three of its US staff were involved, fell more than 5 per cent, while Collins Stewart Tullett, which said one person at its Tullett Liberty arm had been arrested, slipped 1 per cent.
Among those charged were Stephen Moore, chief executive of Itrade, a foreign exchange broker, who previously served on the Foreign Exchange Committee sponsored by the New York Fed.
http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1069132013204
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Wall Street forex traders face charges