HSBC, Citi suspend traders in FOREX probe

[MrWorldwide]

http://uk.reuters.com/article/2014/01/17/uk-forex-banks-idUKBREA0G13G20140117

(Reuters) - HSBC and Citigroup both suspended foreign exchange traders on Friday as a global probe into possible currency market manipulation intensified. Regulators from the United States arrived in London this week, stepping up an investigation in which they are working with Britain's financial watchdog to determine whether traders at some of the world's biggest banks colluded to manipulate the $5.3 trillion-a-day foreign exchange market.

The investigations centre on senior traders' communication of client positions via electronic chatrooms, which featured prominently also in a probe into the rigging of a key interest rate known as the London interbank offered rate, or Libor.

As the currency investigation ramps up, the banks themselves are scrutinising their employees more closely and most are now carrying out internal investigations. Sources told Reuters that Deutsche Bank suspended several traders in New York this week, while U.S. regulators descended on Citigroup's London offices

[paz]

Very interesting. But I think TV is not a good venue for Forex talk. Check forexnews.com for an "in the market" discussion.

[MMarlow]

Very interesting. But I think TV is not a good venue for Forex talk. Check forexnews.com for an "in the market" discussion.

Why not?

[tolsti]

Given that there appear to be a number of TV members indulging in forex trading I think it is an excellent place to discuss it. As regards the subject matter.....' Hey, no shit Sherlock!'

Edited January 18, 2014 by tolsti

[Suradit69]

Given that there appear to be a number of TV members indulging in forex trading I think it is an excellent place to discuss it. As regards the subject matter.....' Hey, no shit Sherlock!'

I love it when the Thai Visa pundits proclaim western banks, stock markets, etc. are so safe and well regulated. They buy into the myth that western governments will protect you and fraud or manipulation would never survive detection. 555 indeed.

One of the regulatory bodies that has intentionally been starved of staff and operating funds is the US SEC. Not specifically to do with forex, but typical when it comes to the reason the well-regulated markets are awash with unenforceable regulations. Strict laws are passed and then pretty much left to the institutions to self-regulate. And the banks and other financial institutions spend more lobbying the US Congress to escape scrutiny than does the government spend to enforce regulations.

Now to make sure that the SEC is as useless as possible:

Congress snatched away half of the $50 million that the Securities and Exchange Commission had set aside for technology initiatives Thursday, dashing the agency’s hopes of beefing up the tools it needs to swiftly spot violations such as illegal trades and accounting fraud.

The decision, included in a ­massive spending bill, was a setback for the Wall Street regulator as it struggles to keep up with a market dominated by high-speed traders and avoid the type of oversight lapses that allowed Bernard Madoff’s Ponzi scheme to go undetected for years.

http://www.washingtonpost.com/business/economy/congress-slashes-secs-funding-for-technology-upgrades/2014/01/16/15ffacaa-7ebc-11e3-9556-4a4bf7bcbd84_story.html

If it's the sort of thing you "enjoy" reading about, David Einhorn wrote about his multi-year attempt to have the SEC investigate a company listed on the NYSE that was what amounted to a ponzi scheme. The SEC did investigate ... David Einhorn, not the compsny. The company was pretty much free to carry on for years and years. David is not shy about promoting himself, but reading this will make you feel a lot less secure in "well-regulated markets" in general.

Edited January 19, 2014 by Suradit69

[MrWorldwide]

I'm just stunned at the arrogance of the traders involved, but then I was stunned at the arrogance of Madoff and the whole Enron crowd. It seems that once your bank balance gets a certain number of zeros before the decimal point you assume that you are somehow invisible to the people who *should* be looking over your shoulder. The idiots at the SEC who were tipped off about Madoff a decade before he was finally nailed and did nothing should be the cell next to him. These are the same people assigned to protect us from Wall St's sharks - not at all comforting.

http://en.wikipedia.org/wiki/Bernie_madoff#Investment_scandal

Harry Markopolous sat down with a laptop and proved - over a matter of hours - that Madoff's fund could only be a pyramid scheme. Ten years later, the SEC finally acted.

http://www.amazon.com/No-One-Would-Listen-Financial/dp/0470919000/ref=sr_1_1?s=books&ie=UTF8&qid=1390179500&sr=1-1&keywords=harry+markopolous

1998-1999
• 1998: My Firm “discovers” Bernie Madoff
• Late 1999: I am asked to reverse engineer Madoff’s returns

2000
• I knew he was a fraudster in 5 minutes
• May: Submission to SEC Boston Regional Office’s Director of Enforcement with 12 Red Flags

Whatever Markopolous' approach may have been - and the doco I saw claimed that he could be a thorny customer - the SEC dont get to dismiss people simply because they dont like the cut of their jib.