U.S. Investigates Currency Trades by Major Banks

By BEN PROTESS, LANDON THOMAS JR. and CHAD BRAY, NYT

From their desks at some of the world’s biggest banks, traders exchanged a series of instant messages that earned them the nickname “the cartel.”

Much like companies that rigged the price of vitamins and animal feed, the traders were competitors that hatched alliances for their own profits, federal investigators suspect.

If those suspicions are correct, the group of traders shared a mission to alter the price of foreign currencies, the largest and yet least regulated market in the financial world. And ultimately, they flooded the market with trades that potentially raised the cost of currency for clients but aided the banks’ own investments.

Now the instant messages, along with similar activity among other traders, are at the center of an international investigation into banks like Barclays, the Royal Bank of Scotland and Citigroup, according to recent public disclosures by the banks and interviews with investigators who spoke on the condition of anonymity. The investigators secured the cooperation of at least one trader, a development that has not been previously disclosed.

(More here.)