‘Cartel’ Traders Weigh Surrender to Face U.S. Rigging ChargesBy , , and
U.S. said to discuss ways for U.K. traders to skip extradition
Mountain of trades, fading memories could complicate U.S. case
Some of the U.K. currency traders whose online chats led to guilty pleas by four of the world’s biggest banks are weighing whether to present themselves to the U.S. to fight charges against them.
Federal prosecutors are discussing ways for three U.K.-based traders to avoid an extensive extradition process and come to the U.S. voluntarily for trial, according to people familiar with the talks. At least two are considering it, two people said.
The people said the prosecutors have been talking with lawyers for former JPMorgan Chase & Co. trader Richard Usher, ex-Citigroup Inc. trader Rohan Ramchandani and Chris Ashton, formerly of Barclays Plc, who were charged in January with conspiring to rig exchange markets through discussions in an electronic chat room known as The Cartel. They released statements at the time declaring their innocence.
The alternative to facing the U.S. charges is spending months or years trapped in the U.K. fighting extradition. That can be a costly battle for defendants, who may need the money to mount a defense if they are ultimately handed over to the U.S., as has happened in similar cases.
One factor in the discussions with the Justice Department is whether the judge would allow the traders to return home to await trial after they appear in the U.S. to plead not guilty, one of the people familiar with the discussions said. Judges tend to follow the government’s lead on such decisions. The traders also want an assurance that the government won’t add charges, another person said.
“Some figure if at some point I’m going to get extradited over there anyway, let me deal with the substance now and not prolong the agony,” said Michael Koenig, a partner at Hinckley, Allen & Snyder LLP who isn’t involved in the case. “Some people can’t live with uncertainty and don’t want to look over their shoulder.”
Prosecutors have recently reached out to some witnesses to ensure their cooperation if the trial goes forward, an indication that the government thinks it will, according to another person familiar with the matter.
A former UBS Group AG trader who was also a member of The Cartel, Matt Gardiner, has been helping prosecutors build cases against the traders, people familiar with the matter have told Bloomberg.
Lawyers for the traders declined to comment for this article. Mark Abueg, a Justice Department spokesman, declined to comment.
Challenges for U.S.
The Cartel case is an important capstone for the Obama administration, which was criticized for doing little to hold bankers to account for wrongdoing. While prosecutors have since won the convictions of several individuals in market-manipulation cases, the Cartel matter is one of the highest-profile manipulation cases and one of the more challenging for prosecutors to win. Its outcome will not only color the previous administration’s legacy on fighting financial crimes but may also set a bar for what prosecutors will pursue in the future.
Prosecutors would have to convince a jury that the traders had an agreement to fix prices in the foreign-currency market, a potentially tough task given the sheer volume of trades and talk throughout the alleged five-year conspiracy. The Justice Department would need to present witnesses who can testify about behavior that goes back as far as a decade.
The evidence that prosecutors would roll out hasn’t been tested in court. A complete picture of the Cartel trading never emerged because Citigroup, Barclays, JPMorgan and Royal Bank of Scotland Group Plc reached settlements without trial in 2015, pleading guilty to conspiring to manipulate the price of U.S. dollars and euros. UBS pleaded guilty in a related matter. Together the banks paid $2.5 billion in criminal fines.
The U.S. alleges that Usher, Ramchandani and Ashton used the online chat room to coordinate trading of U.S. dollars and euros and manipulate prices of the currencies, according to the January indictment. They are charged with conspiring to restrain trade from the end of 2007 through the beginning of 2013. The goal of the conspiracy was to suppress and eliminate competition in the trading of the euro and the dollar in the U.S., U.K. and Switzerland, according to prosecutors.
The traders face a maximum penalty of 10 years in prison and a $1 million fine, although that figure may be increased depending on any gains from misconduct.
Since the antitrust division filed charges against the three traders in January, the U.S. hasn’t applied for extradition. Until then, the defendants, who live in the U.K., aren’t under any obligation to come to the U.S. to face the accusations.
Millions in Fines
U.S. bank regulators have already handed down punishments for the three men, citing the alleged conspiracy, including banning them from the financial industry. Usher and Ramchandani were fined $5 million in January for violating antitrust laws, engaging in unsound and unsafe practices and breaching their fiduciary duty by the Office of the Comptroller of the Currency. In August, the Federal Reserve fined Ashton $1.2 million. Those actions didn’t include any admission of guilt by the traders.
In July, the Fed barred Gardiner from banking for his alleged role in the conspiracy.
The Justice Department has won convictions of foreign traders in the broader currency-rigging probe, and of several London-based Rabobank Groep traders for manipulating a key financial benchmark. However, the case against the three Cartel traders involves a violation of antitrust laws, and such cases have typically been resolved through settlements and guilty pleas.
A central issue for prosecutors is whether they can convince a jury that electronic conversations between traders conclusively show agreements to rig currency prices, according to lawyers who have viewed some of the government’s evidence. With the traders active in the market every day, prosecutors will have to show that the trades at issue were the result of the conspiracy and weren’t coincidental. Messages in which traders allegedly discussed attempts to move the market don’t always correspond with actual trades or price movements, one person said.
The government will also have to establish that the defendants knew that what they were doing was illegal. That could be challenging if they didn’t take steps to cover up their actions.