— David Meyers (@davidfmeyers) May 20, 2015
Yesterday the Department of Justice announced guilty pleas from Barclays, Citigroup, JPMorgan and the Royal Bank of Scotland for manipulating international currency markets. The banks also agreed to pay fines totaling $5.8 billion.
In order to rig the markets in their favor the banks formed a group known as “The Cartel” where traders from Citigroup, JPMorgan, UBS, RBS, and Barclays conspired to rig LIBOR and currency exchange rates. The Cartel’s reach was extensive and the group was able to shift global currency exchange and interest rates by acting in collusion through their respective financial institutions.
To join the group, which operated an exclusive chatroom to conspire on trades, a trader would go through a gang initiation process of sorts complete with a probationary period and a threat.
The trader, who was the main Euro trader for Barclays in 2011, made various arguments about how he “would add value” to the chatroom, according to the NYDFS. Ultimately, they let him join for a one-month trial, but allegedly with a pretty ominous warning:
“[M]ess this up and sleep with one eye open at night.” Fortunately for that trader (but probably not so fortunately, in the end), he was allowed to stay in the group until it was dissolved in 2012.
Banksters truly play the part sometimes. The sleep with one eye open threat is just one of many quotes from traders rigging the market that display a criminal mindset.
The banks in question claim to have terminated all the traders involved in the Cartel though they offered little in the way of evidence to prove it. Of course, we could all just trust them to do the right thing. What could go wrong?