Cartel three out on bail after entering ‘not guilty’ pleas

Three former currency traders from the UK, who are accused of manipulating prices in the EUR/USD spot market, pleaded not guilty to the charge on July 17 in the US Southern District Court of New York and were released on a combined $1.85 million bond.

Bail for Richard Usher, an ex-employee of JP Morgan, is set at $650,000. For Christopher Ashton, formerly of Barclays, it is $200,000, while ex-Citi employee Rohan Ramchandani’s is $1 million. The three men secured the bond through partial cash payments and will return to court on November 9.

They face up to 10 years in prison and/or $1 million in penalties on the single-count indictment charge of conspiracy to restrain trade if the charges are proven. They are allowed to return home to the UK while the case awaits trial.

“The US authorities have indicted [Richard] in New York for actions he undertook entirely in London and which the UK authorities concluded, after a thorough investigation, were legal,” lawyers from White & Case told FX Week in a press statement, adding that prosecutors would not have prevailed if they had sought extradition.

“Richard and his family live in London. He is grateful that the Court and the Department of Justice (DoJ) recognised that he should not be required to uproot and relocate to the US while the government and the defence prepare for trial,” the statement continued. “He is looking forward to receiving comprehensive disclosure of the evidence the government obtained during its multi-year investigation so that he can fully and fairly defend himself at trial.”

[Ramchandani] has waived extradition and agreed to come to the US voluntarily to contest the charge and clear his name

Heather Tewksbury and Anjan Sahni, WilmerHale

Ramchandani’s attorneys, Heather Tewksbury and Anjan Sahni of WilmerHale, also told FX Week that he “has waived extradition and agreed to come to the US voluntarily to contest the charge and clear his name”.

Sara George, a partner at Stephenson Harwood, is the UK counsel for Ashton. She says Ashton wishes to challenge the allegations made against him before a jury. 

“He has not committed any offence and wishes to avail himself of the right to trial by jury. At all material times, Chris Ashton worked in England for Barclays, an English bank. He complied fully with all legal and compliance requirements then in place. He was never given any legal advice, guidance or instruction by Barclays in relation to US law,” George says.  

“The UK Serious Fraud Office (SFO) conducted a thorough and independent investigation lasting over one and a half years, and involving in excess of half a million documents. The very same documents were provided to the US Department of Justice. Following its investigation, no charges were brought by the SFO,” she adds.

The former senior traders are believed to be among a group of participants who called themselves the ‘Cartel’ or ‘Mafia’, who allegedly used private electronic chatrooms to communicate customer orders and risk positions. The US government alleges the three ex-traders conspired with others to suppress and eliminate competition for the buying and selling of the currency pair in the US and other jurisdictions between December 2007 and January 2013.

The indictment states a “substantial number” of EUR/USD transactions conducted by the three – and others who conspired with them – were settled through a settlement bank in the US, and the dollar portion of the affected EUR/USD trades flowed in and out of USD accounts located in New York and Connecticut. The document did not state either the number of transactions or accounts involved in the alleged scheme.

When asked by Southern District Court judge Richard Berman what the government intends to prove in the case, US attorneys said they aim to show the senior traders conspired to transact at certain times in the market.

Co-ordinated activities

“They co-ordinated their activities,” said Jeffrey Martino, chief of the antitrust division’s New York office. “In doing this, they raised the prices and stabilised the prices they were trying [to see].”

Outside of entering not guilty pleas on behalf of their clients, the attorneys for Usher, Ashton and Ramchandani told judge Berman they intend to file a motion to dismiss the case. Of particular concern for the defence teams is the issue of jurisdiction or extraterritorial reach of the Sherman Antitrust Act.

In June, when the three ex-traders agreed to waive extradition to travel to the US to answer to the charge, defence attorneys questioned the US’s jurisdiction and validity for bringing the case after a lengthy investigation by the UK’s Serious Fraud Office found insufficient evidence to bring successful convictions.

Bank fines

In May 2015, Barclays, Citigroup, JP Morgan and the Royal Bank of Scotland pleaded guilty to felony charges that they conspired to manipulate the price of dollars and euros exchanged in the FX spot market. The banks agreed to pay more than $2.5 billion in fines. Since news broke in 2013 that multiple banks colluded to fix exchange rates by moving the WM/Reuters benchmark, banks have paid out just under $13 billion in fines.

US authorities and civil lawyers have been able to use the information and co-operation gleaned from those cases to broaden the scope and reach of their case. Prosecutors at the US DoJ have said they intend to bring charges against individuals suspected of corporate wrongdoing. Civil antitrust lawsuits have secured $2 billion in damages so far for US investors.