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Wednesday, January 4, 2017

Foreign Currency Exchange Dealer Pleads Guilty to Antitrust Conspiracy

First Individual Plea in Ongoing Investigation

A foreign currency exchange (FX) dealer pleaded guilty to participating in a price-fixing conspiracy in the FX market, the Justice Department announced today.  

According to the one-count information filed in the U.S. District Court for the Southern District of New York, Jason 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.  From approximately January 2007 until July 2013, Katz and FX dealers at competing institutions conspired to suppress and eliminate competition by fixing prices in CEEMEA currencies, in violation of the Sherman Act, 15 U.S.C. § 1.  As part of this conspiracy, Katz and his co-conspirators 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.  Under his plea agreement, Katz has agreed to cooperate with the department’s ongoing investigation into the FX market.

“These conspirators engaged in blatant collusion and succeeded in manipulating exchange rates for multiple currencies to their advantage,” said Deputy Assistant Attorney General Brent Snyder of the Justice Department’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.”   

“The Federal Deposit Insurance Corporation Office of Inspector General (FDIC OIG) is pleased to join the Antitrust Division and our law enforcement colleagues in pursuing this investigation of price fixing in the foreign currency exchange market,” said Acting Inspector General Frederick W. Gibson of FDIC OIG.  “We are committed in our efforts to ensure that those who seek to undermine the integrity of the financial services industry will be held accountable.” 

Katz is the first individual to plead guilty as a result of the department’s ongoing investigation into antitrust and fraud crimes in the FX market, and the third individual to be charged.  On May 20, 2015, four major banks – Citicorp, JPMorgan Chase & Co., Barclays PLC and The Royal Bank of Scotland plc – pleaded guilty at the parent level and agreed to pay collectively more than $2.5 billion in criminal fines for their participation in an antitrust conspiracy to manipulate the price of U.S. dollars and euros exchanged in the FX market.  A fifth bank, UBS AG, pleaded guilty to manipulating the London Interbank Offered Rate (LIBOR) and other benchmark interest rates and agreed to pay a $203 million criminal penalty, after breaching its December 2012 non-prosecution agreement resolving the LIBOR investigation.  On July 20, 2016, fraud charges were brought by the Justice Department’s Criminal Division against two FX executives for conspiring to defraud a client of their bank through a front running scheme.   

This antitrust investigation is being conducted by the Antitrust Division’s New York Office with the assistance of the FDIC OIG and the FBI’s Washington Field Office.  The Criminal Division’s Fraud Section also provided substantial assistance in this matter.  

A violation of the Sherman Act, 15 U.S.C. § 1, carries a maximum penalty of ten years in prison and a $1 million fine.  The maximum fine for a Sherman Act violation 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.  

The charge was brought in connection with the President Obama’s Financial Fraud Enforcement Task Force.  The president established the task force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. Attorneys’ Offices and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. 

For more information about the task force, please visit www.StopFraud.gov.  Anyone with information concerning price fixing or other anticompetitive conduct in the FX market should contact the New York Office of the Antitrust Division at (212) 335-8000, call the Antitrust Division’s Citizen Complaint Center at (888) 647-3258 or  visit www.justice.gov/atr/contact/newcase.html

Katz Information

Press Release Number: 
Updated January 4, 2017