Jason Katz, who formerly worked as an FX dealer at Standard Bank, Barclays, BNP Paribas and ANZ, has become the first individual to plead guilty to participating in a price-fixing conspiracy in the FX market, the US Department of Justice (DoJ) announced today.
According to the relevant court documents, Katz was a dealer of Central and Eastern European, Middle Eastern and African (CEEMEA) currencies on the New York FX desks of three successive financial institutions, and from approximately January 2007 until July 2013, he conspired with FX dealers at competing institutions to “suppress and eliminate competition” by fixing prices in CEEMEA currencies, in violation of US law, according to the DoJ.
Katz and his co-conspirators allegedly manipulated prices on an electronic FX trading platform through the creation of non-bona fide trades, coordinated the placement of bids and offers on that platform, and agreed on currency prices they would quote specific customers, among other conduct, the DoJ asserts.
“These conspirators engaged in blatant collusion and succeeded in manipulating exchange rates for multiple currencies to their advantage,” says deputy assistant attorney general Brent Snyder of the DoJ’s Antitrust Division. “Conspiracies such as this undermine the integrity of our financial markets, and the Antitrust Division is committed to ensuring that they are pursued and punished.”
Katz is the first individual to plead guilty as a result of the department’s ongoing investigation into alleged antitrust and fraud crimes in the FX market, and the third individual to be charged.
The maximum penalty for Katz’s infringement is 10 years in prison and a $1 million fine. However, the maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by victims if either amount is greater than the statutory maximum.
Separately, the US Federal Reserve Board (FRB) has also announced that it is permanently prohibiting Katz from participating in the banking industry. As part of a consent order that he signed, Katz is also required to cooperate with the FRB’s ongoing investigation into FX malpractice.
“Through the use of electronic chat rooms, Katz coordinated his trading with competitors, engaged competitors to agree on the FX prices quoted to customers, disclosed confidential customer information to traders at other institutions, and engaged in other unsafe or unsound practices,” the FRB said in a statement.
Profit & Loss has previously reported that, following the $5.8 billion in fines paid by banks in association with FX market abuse allegations, the focus in the US could turn towards pursuing individuals rather than financial institutions in cases of financial services misconduct.