FX Fixing Scandal: US Regulator Benjamin Lawsky Demands Bank Currency Documents
FX Fixing Scandal: US Regulator Benjamin Lawsky Demands Bank Currency DocumentsReuters

The US regulator that took on Standard Chartered for laundering cash from sanctioned countries, and won, is seeking documents from some of the world's biggest banks as part of global investigation into FX fixing.

According to sources, Benjamin Lawsky, head of the Department of Financial Services in the US, has asked Barclays, Credit Suisse, Deutsche, Goldman, Lloyds Banking Group, Royal Bank of Scotland, Societe Generale and Standard Chartered for documents related to currency trading.

The US' Commodity Futures Trading Commission has already prodded Deutsche Bank and Citigroup to hand over any evidence of wrongdoing related to potential currency market manipulation.

Meanwhile, Deutsche Bank has started to question around 50 employees, as part of its internal investigation, into whether the benchmark interbank lending rates were rigged.

The staff, which are being questioned, are being allowed to bring lawyers or witnesses to the talks, following a probe by auditor Ernst & Young (E&Y).

Deutsche Bank has allegedly spent millions of dollars going through traders' emails and chat sessions looking for specific dates, phrases and keywords in a bid to root out evidence of wrongdoing.

Benjamin Lawsky, head of the Department of Financial Services in the US led the investigation into Standard Chartered's dealings with clients in Iran. (Photo: Reuters)
Benjamin Lawsky, head of the Department of Financial Services in the US led the investigation into Standard Chartered's dealings with clients in Iran.Reuters

The daily $5tn (£3.1tn, €3.7tn) currency market is the largest in the financial system and is pegged to the value of funds, derivatives and products.

Morningstar estimates that $3.6tn in funds, including pension and savings accounts, track global indexes.

The top five banks in foreign exchange trading, including Deutsche Bank and Citi, account for about 50% of total volume.

Meanwhile, the top 10, which also include Goldman, RBS and Barclays account for almost 80%.

IBTimes UK exclusively revealed that a whistleblower alerted regulators in the US, UK and Switzerland in 2011 about some of the world's largest trading companies and banks manipulating benchmark sterling, US dollar and Swiss franc currency rates.

However, it was only until this year that these authorities started investigating the allegations of market rigging.

Trader Suspensions, Exits, Firings

Around 20 traders and senior managers in the FX markets have either been put on leave, suspended or fired since the investigations were formally announced in October.

Deutsche Bank has suspended one New York based trader who deals in Argentian pesos, after allegedly finding emails that indicated attempts to manipulate benchmark foreign exchange rates.

Reports have surfaced that Lloyds has also suspended several traders.

Meanwhile, senior Goldman Sachs forex trader Steven Cho is tipped to be leaving the US investment banking giant.

Cho is a partner at Goldman Sachs and heads up the bank's spot and forward trading of major foreign currencies. A source at the bank confirmed Cho is to leave.

According to Reuters, Cho is retiring alongside Leland Lim, Goldman's co-head of macro trading for Asia Pacific, excluding Japan.

Before the news broke about Goldman's Cho, it emerged that Citi's global head of foreign exchange, Anil Prasad, will leave the investment bank in March.

Sources told IBTimes UK his departure is "entirely unrelated" to the global investigations into the potential manipulation of currency rates.

Nobody from Goldman has been suspended or sacked and there is nothing to suggest Cho's or Lim's exits are related to the regulatory probes.