DOJ wants to be able to refer to bank guilty pleas in case against FX Cartel

Maria Nikolova

The US Government says it should be able to cross-examine a witness with facts tending to show that the banks did not, in fact, condone the traders’ behavior.

As the criminal case against Richard Usher, Rohan Ramchandani, and Christopher Ashton, also known as FX Cartel or FX Mafia, continues at the New York Southern District Court, and the start date of the trial approaches, the discussions around evidence and witnesses become more heated and intense.

Documents filed with the Court on August 13, 2018, show that the Department of Justice (DOJ) disagrees with several of the defendants’ requests regarding evidence to be used at trial. The Government opposes, inter alia, the defendants’ motion to exclude any reference to bank guilty pleas; motion to exclude evidence and argument concerning “spoofing”; and the defendants’ motion to exclude evidence of alleged non-compliance with bank compliance policies.

The bank guilty pleas in question are the guilty pleas in FX market manipulation actions targeting the parent companies of the banks where the defendants worked. These pleas include the March 2015 plea agreement for Barclays PLC, parent company of the bank that employed Defendant Ashton, as well as the plea agreements for Citicorp (parent company of the bank that employed Defendant Ramchandani) and JPMorgan Chase & Co. and The Royal Bank of Scotland (parent companies of banks that employed Defendant Usher).

Although the traders are not named in the plea agreements, paragraphs 4(g)-4(i) of each state that the plea is premised upon (inter alia) the conspiracy entered into by members of The Cartel, the collective name used by the traders.

The Government argues that if evidence of the pleas becomes relevant at trial, it intends to call to the witness stand the signatories of one or more of the plea agreements or other witnesses competent to testify to the substance of the guilty pleas.

The cornerstone of Defendants’ trial defense appears to be that their participation in the alleged conspiracy was well within the “customs, norms, or expected behaviors” of the Forex market and benefitted the operation of the FX market as well as its individual participants. The Cartel traders also propose instructing the jury that if they “merely acted in accordance with” market standards, this provides basis for acquittal.

This strategy opens the door to Government rebuttal evidence, including the bank guilty pleas. If, for instance, a defense expert is allowed to testify that the traders’ conduct was within the bounds of the “market standard” to suggest that the conduct was permissible, the Government should be able to cross-examine him with evidence that, to the contrary, the traders’ employers admitted that the conduct was against the law.

Defendants also indicate they will argue that bank supervisors or administrators were fully aware of the traders’ participation in the alleged conspiracy and encouraged them to engage in that conduct. The traders are likely to argue that they should be acquitted because the banks’ condoning their conduct meant the defendants had no idea what they were doing was wrong.

If a defendant or other witness testifies accordingly, the Government should be able to cross- examine that witness with facts tending to show that the bank did not, in fact, condone the defendant’s behavior. Among those facts is the bank’s guilty plea, admitting that the defendant’s conduct was criminal.

In addition, according to the Government, the Court should deny the defendants’ motion to exclude evidence and argument concerning spoofing. The spoofing evidence the Government seeks to offer is inextricably intertwined with the charged offense and is thus relevant to proving that Defendants entered into an illegal agreement to restrain trade. this evidence is also offered to show, on the specific occasions when Defendants engaged in spoofing, that they intended to influence the price of EUR/USD, which was the same goal of the charged conspiracy.

The Government also insists that the Court should deny traders’ motion to exclude certain evidence that the defendants claim are compliance-related or concern alleged compliance violations. The evidence contains admissions by Defendants and is relevant to their knowing participation in the charged conspiracy and consciousness of guilt.

For instance, on July 18, 2012, Ashton and a fellow FX trader had a discussion. On the call, Ashton agreed that sharing fix information with competitors was wrong, even if it was commonly done across the market; as Ashton put it, “it’s not a defense.” Ashton also confessed his fear that one day, his own chats, in which he and competing traders “high fived” each other when they were all buying at a fix and made money, will be revealed.

Ashton admitted: “In the cold light of day, it’s gonna look f***ing awful.”

The case, captioned USA v. Usher et al (1:17-cr-00019), targets Usher, former Head of G11 FX Trading-UK at an affiliate of Royal Bank of Scotland plc, as well as former Managing Director at an affiliate of JPMorgan Chase & Co.; Ramchandani, former Managing Director and head of G10 FX spot trading at an affiliate of Citicorp; and Ashton, former Head of Spot FX at an affiliate of Barclays PLC. The former traders are alleged to have conspired to manipulate the Forex market by “coordinating their bidding, offering, and trading” at “certain times.”

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