UBS received immunity in the currency manipulation scandal as it was the first bank to report misconduct in the market. Picture: AFP/FABRICE COFFRINI
UBS received immunity in the currency manipulation scandal as it was the first bank to report misconduct in the market. Picture: AFP/FABRICE COFFRINI

The three British currency traders who were part of an exclusive online chat group referred to by members as “the cartel” go on trial this week for alleged market manipulation that has already cost global banks $14bn in penalties.

The trio represented banks handling a major chunk of the $5.1-trillion a day currency market. The men are accused of rigging a key market benchmark to profit at the expense of competitors and their own customers.

Since their behaviour was exposed by Bloomberg in 2013, the industry has pledged to clean up its act with tighter in-house restrictions and better compliance tools.

A highlight of the trial, which begins on Tuesday in federal court in New York, will be testimony by a former member of the group, which was also referred to as “the mafia”. Recordings of telephone calls and transcripts of the group’s instant-message chats will probably be presented.

Prosecutors say the defendants, who each face as long as 10 years in prison, co-ordinated their trades to manipulate the spot exchange rate for euros and dollars from 2007 to 2013. All three have pleaded not guilty.

While the US won guilty pleas from four banks — JPMorgan Chase, Citigroup, Royal Bank of Scotland, and Barclays — none of the individuals at the heart of the conduct has been held accountable.

In London, the centre of the global currency market, UK officials in 2016 dropped their criminal investigation of individuals, saying there wasn’t enough evidence.

The defendants

Richard Usher, who went by the moniker “Feston” in chat-room conversations, is the former head of foreign-exchange spot trading in emerging markets in Europe and Asia at JPMorgan. Before JPMorgan, Usher worked at Royal Bank of Scotland.

Rohan Ramchandani, known as “Rug” or “Ruggy”, is the former head of spot trading for 10 major currencies at Citigroup.

Christopher Ashton, nicknamed “Robocop”, is the former head of spot FX trading at Barclays.

The star witness

Matt Gardiner, a former UBS trader who went by “Fossil” in the chat room because he is a few years older than the others, has been co-operating with prosecutors and is expected to testify against the three men at trial. Gardiner wasn’t charged but was prohibited by the Federal Reserve from participating in the banking industry.

UBS received immunity from antitrust charges for being the first institution to report misconduct in the market, although it pleaded guilty to a related fraud matter.

The stakes

The case has already affected the business of currency trading, the world’s biggest market.

Guilty pleas by four banks in 2015 resulted in the companies paying $2.5bn in US fines, plus an additional $203m penalty for UBS. All told, more than a dozen financial institutions paid about $11.8bn in fines and penalties globally, with another $2.3bn spent to compensate customers and investors.

The trial poses a test of the US justice department’s commitment to punishing individual wrongdoers in corporate cases rather than just accepting cash settlements.

After the banks settled, it took almost two more years to indict Usher, Ramchandani and Ashton.

The evidence

Prosecutors are expected to show the jury transcripts of their chats as evidence that they shared information about client orders and coordinated euro-dollar trades to increase their profits.

Transcripts released by US regulators in 2014 showed the traders used coded lingo and humour to boast about “whacking” and “double teaming” the market and congratulating one another when their plans paid off.

According to grand jury testimony, they used code names for their customers: “Big Boy” for China’s central bank, and “Nemesis” for South Korea’s central bank.

At the time, JPMorgan, UBS, Citigroup and Barclays accounted for about 45% of the global spot-currency market, according to a survey by Euromoney Institutional Investor.

The tapes and chat transcripts could be compelling evidence for a jury, said Lisa Phelan, a former justice department prosecutor now at Morrison & Foerster in Washington.

Still, defence lawyers would probably argue that the comments aren’t serious or are being taken out of context by prosecutors, Phelan said. Trading in the market can sound complicated, and participants litter their communications with jargon some jurors may not understand.

“The government will be looking to try to tell as simplified a story as it can,” Phelan said. “You risk losing the jury if you’re listening to hundreds of hours of communications, much of which you can assume would be fairly noncontroversial.”

Defence attorneys may also attack the government’s case as an overreach. They unsuccessfully tried to have the case thrown out by arguing that the conduct took place in Europe “with no intended or foreseeable effects” on US commerce.


In recent years, the justice department and other regulators, including the Fed have been investigating allegations of manipulation in several markets, from interest rates and commodities to the benchmark London interbank offered rate, or Libor.

In the currency market, former HSBC trader Mark Johnson was convicted last year of front-running a $3.5bn client order. He is appealing.

Jason Katz, a former trader at Barclays, and ex-Citigroup trader Christopher Cummins each pleaded guilty last year to conspiring to manipulate emerging-market currency trades.

The crackdowns led to pledges by bankers and industry executives to clean up bad behaviour, and many are paying closer attention to what employees say and do.

From 2014 to 2017, broker-dealer operations at banks spent an estimated $2.3bn to improve compliance with rules, including stronger surveillance tools, according to Boston-based consultant Aite Group. More than 300 market participants have pledged to be good citizens under the voluntary FX Global Code, which aims to boost standards and rebuild trust.