Ex-UBS Trader in ‘Cartel’ Said to Help U.S. in Currency Probe

  • Gardiner said to be cooperating with Justice Department
  • Cases against individuals seen coming as soon as this summer

A currency trader from the Cartel chatroom -- the instant-messaging group the U.S. government named in wringing guilty pleas from five global banks -- has been helping prosecutors who are trying to build foreign-exchange manipulation cases against individuals, according to two people familiar with the matter.

The cooperator, they said, is Matt Gardiner, a former UBS Group AG trader known in the chatroom as Fossil. U.S. officials are confident they will be able to charge individuals over currency-rate manipulation, possibly as soon as this summer, a third person said.

Announcing the bank convictions in May 2015, the U.S. said traders working for the institutions -- UBS, JPMorgan Chase & Co., Citigroup Inc., Royal Bank of Scotland Group Plc and Barclays Plc -- had conspired in the instant-messaging group, which participants also referred to as the Mafia.

Though the Justice Department said individual charges were likely in the matter, a year has passed without further action. Time may be running short to bring a case under the Obama administration and Justice Department leadership that has stressed the importance of holding individuals accountable for corporate crime. Last month, prosecutors in the U.K. dropped their own pursuit of individuals in the matter, saying there wasn’t enough evidence.

An attorney for Gardiner declined to comment. A Justice Department spokesman declined to comment.

A cooperator like Gardiner could bolster the U.S. case by helping prosecutors understand the market and actions by traders, and later explaining it all to a jury. Prosecutors have said traders in the chatroom used coded lingo to share information about client orders and coordinated euro-dollar trades in an effort to increase their profits.

Gardiner, a currency trader who worked at several banks, gained his chatroom moniker because he was a few years older than other members, people familiar with the group have said. Other participants were Richard Usher, a currency trader who worked at RBS and later at JPMorgan; Rohan Ramchandani, who worked at Citigroup; and then-Barclays trader Chris Ashton, these people have said. 

The two people familiar with the investigation didn’t say whether any of the traders in the Cartel are likely to be charged. None of them have been charged elsewhere or commented publicly. 

Ashton and Ramchandani declined to comment through their attorneys. A lawyer for Usher didn’t immediately respond to voicemails and e-mails seeking comment. Representatives of Barclays, RBS, UBS, Citigroup and JPMorgan declined to comment.

Whether Gardiner has agreed to cooperate in exchange for lenient treatment was also unclear. He has been cooperating with the Justice Department for at least several months, according to the people familiar with the matter. 

UBS received immunity from antitrust charges for being the first institution to report misconduct in the market, although it pleaded guilty to a related fraud matter. Prosecutors can extend that immunity to former employees.

The Cartel chatroom ran from at least December 2007 until January 2013, people familiar with it have said. The conversations paused in 2010 when Usher left RBS and started again when he joined JPMorgan later in year as a currency dealer in London, they said. 

Membership was coveted, those people said: The four banks with senior traders in the Cartel’s later iteration -- JPMorgan, UBS, Citigroup and Barclays -- controlled about 45 percent of the global spot-currency market, according to a survey at the time by Euromoney Institutional Investor Plc. 

Banks provided transcripts of chats to the Justice Department and international authorities. Many conversations took place just before daily fixes -- the brief windows of time when data providers take a snapshot of trading so they can set daily rates. 

One such transcript shared with authorities, which was reviewed by Bloomberg, gives a flavor of the jargon-and-joke filled exchanges. The transcript from the Jan. 5, 2012, exchange identifies the participants as Gardiner, Usher and Ramchandani, who others sometimes called Rug or Ruggy. It took place just ahead of the 1:15 p.m. European Central Bank fix, which provides a daily benchmark of the Euro exchange rate with more than 30 currencies:

Ramchandani: getting 250 on ecb

Gardiner: gettin 30 here

Gardiner: a 22 fix wld suit if you cld oblige rug

Ramchandani: hahahahah

Usher: I need 65 rug

Usher: or u want a lesson

Ramchandani: :-)

Ramchandani: haha

Ramchandani: 65 urs ricardo

Usher: ta

Gardiner: popcorn anyone?

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