US Govt and “FX Mafia” unable to resolve disputes over evidence from foreign regulators, FRB

Maria Nikolova

The US Government insists it cannot obtain the evidence that “FX Cartel” traders demand from a number of foreign regulators and the Federal Reserve Bank.

The parties in a Forex manipulation case targeting ex-traders Richard Usher, Rohan Ramchandani, and Christopher Ashton are unable to agree on certain evidence to be obtained from foreign regulators and the Federal Reserve Bank. The latest submissions with the New York Southern District Court underline the differences between the parties.

Let’s recall that in June this year, the former Forex traders who stand accused of conspiring to fix prices and rig bids for US Dollars and Euros in the FX spot market, asked the Court to order the Government to produce extra evidence in this case. The defendants had asked the Judge to help them access statements by the chief witness to the UK Serious Fraud Office (SFO), Australia Competition & Consumer Commission (ACCC), and Korea Fair Trade Commission (KFTC). The Government had produced to the defendants the statement that the witness made to the Australian Competition & Consumer Commission (ACCC). However, the ex-traders said they were aware of at least three additional statements – specifically, statements made to the competition authorities in Korea and Brazil, and a statement to the Federal Reserve Bank (FRB) in the United States. These statements are material to preparing the defense, yet the Government has declined to produce them.

On July 3, 2018, the US Government retained its position – it cannot and is unwilling to provide the requested documents.

The Government said it was not required to search the files of a foreign agency that was not a member of the prosecution team, and does not have its own authority to obtain the remaining statement directly from the foreign sovereign that has it. While the Government has succeeded in voluntarily obtaining and providing to the defendants one of the statements they seek, the refusal by the other foreign regulator to provide the statement it possesses forecloses any additional means by which the Government could obtain this statement. Therefore, the defendants’ request that the Government seek to obtain the one remaining foreign-located statement must be denied, the DOJ says.

Furthermore, according to the US authorities, the defendants are similarly not entitled to statements made by the cooperating witness to the Federal Reserve Bank (FRB), because the FRB was not a member of the prosecution team when any statements were made.

In this case, the Department of Justice (DOJ) conducted limited fact-gathering with the FRB, which included only jointly attending 19 meetings and proffers with counsel for subjects and potential witnesses, between 2014 and February 2016. The DOJ and FRB did not share resources, exchange investigative evidence, or involve each other in strategic decisions. According to the US Government, the defendants seek information that is outside of the scope of permissible discovery in this case because it was gathered by the FRB as part of its own independent investigation.

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, are alleged to have conspired to manipulate the FX market by “coordinating their bidding, offering, and trading” at “certain times.”

Their trial was recently rescheduled and is set to start on October 1, 2018.

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