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Screenshot of a breaking news alert e-mail from Q2 2017
Regulators turn their attention to traders’ personal accounts
Another week goes on and more troubling events for the big banks are reported by the media. While regulatory investigations of FX fix manipulations are ongoing, the USA Today reported yesterday that South Korean semiconductor company Simmtech has filed a class action lawsuit against seven major banks.
This is a second lawsuit that we know of after a couple of weeks ago Massachusetts based benefits fund announced it is suing the same banks.
While the banks have denied any wrongdoing, the lawsuit blamed institutional traders for trading ahead of client orders which were scheduled to be executed at the time of the 4 pm London foreign exchange fix. Such wrongdoings are very difficult to prove and we have no doubt that these investigations could go on for a protracted period of time.
In another piece titled “UK probes private accounts of foreign exchange traders”, the Financial Times reports of an FCA probe of traders’ personal accounts at spread trading brokers. If the spread betting firms are based in the UK and they present information to the authorities, some traders might get in very serious trouble. However one can think of a ton of different ways to avoid that – using offshore brokerages, relatives’ accounts, informing personal buddies as to when and how to trade by sending out a simple coded IM, or an SMS message.
In short we are in need in some proof from regulators to get on with lawsuits to go beyond simply allegations. While the probe goes on and there are actions taken against at least a dozen traders according to the FT, it all remains speculative in nature and proof is still lacking.