Officials from the U.S. Department of Justice will interview current
or former employees at HSBC Holdings plc, among other banks, people
familiar with the matter told Reuters.
The plans to interview traders from HSBC do not necessarily indicate
that prosecutors will file criminal charges against the bank or its
employees, sources said, noting it is common for prosecutors to
speak to witnesses in any criminal investigation. HSBC declined to
The authorities have given banks under investigation until
mid-December to turn over related information, one source said.
JPMorgan Chase & Co, Citigroup Inc, UBS AG <UBSN.VX>, and others
have disclosed that they are under criminal investigation in the
foreign exchange probe.
A Justice Department spokesman declined comment, as did
representatives of the banks.
The interviews come soon after U.S., Swiss, and British civil
authorities fined those banks and others $4.3 billion for failing to
stop traders from trying to manipulate the largely unregulated
$5-trillion-a-day foreign exchange market.
The fines brought total penalties for benchmark manipulation to more
than $10 billion over two years.
The Justice Department is undertaking a broad probe into whether
banks have been colluding to move currency rates and boost their
profits in trading, violating fraud or antitrust laws. Prosecutors
are also looking at whether traders misled clients.
Authorities are expected to charge individuals and banks, though
institutions are likely to resolve charges through deferred
prosecution agreements or guilty pleas instead of litigation. Banks
in recent years have been accused of manipulating benchmarks across
a series of markets.
The foreign exchange benchmarks under investigation are used by
asset managers and corporate treasurers to value their holdings,
which run into the trillions of dollars.
When announcing the civil settlement over their foreign exchange
business, the banks acknowledged wrongdoing, condemned the actions
of the involved employees and said they were working to fix the
Banks have suspended or fired more than 30 traders, clamped down on
chat rooms and boosted their use of automated trading.
"NICE TEAM WORK"
Earlier this month Attorney General Eric Holder said he expected
"the beginning stages of a resolution" of the Justice Department's
investigation into the foreign exchange market to come soon. Holder
also confirmed in September the department had enlisted undercover
cooperators as part of its probe.
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U.S. prosecutors have pursued evidence overseas in other
investigations, and flew to London to meet with counterparts, share
evidence and conduct joint interviews on an earlier probe into
manipulating interest rate benchmarks, including Libor.
That probe has resulted in criminal charges against 11 traders and
others including UBS, Dutch lender Rabobank. Two former Rabobank
employees pleaded guilty.
In the foreign exchange probe, U.S. authorities have leverage to
obtain information from Barclays, UBS, HSBC and others because the
banks are under deferred, or non-prosecution, agreements to resolve
HSBC, for example, is under a five-year deferred prosecution
agreement with the Justice Department from 2012 that resolved
charges it failed to catch hundreds of millions of dollars in drug
money that flowed through the bank.
The deals force the banks to turn over any information that
prosecutors ask for, and open them up to possible criminal
prosecution for both prior failures and crimes committed after the
The HSBC agreement specifically forces the bank to make any current
and former employees available, at the bank's cost, to be
interviewed by law enforcement authorities.
The civil settlement from earlier this month over currency
manipulation included online chat room transcripts in which traders
are seen working together to move rates at which currency pairs like
the U.S. dollar and the British pound trade.
In one chat, an HSBC trader and others celebrate moving the rate:
"Well done gents," one said. "Hooray nice team work," another
(Reporting by Jamie McGeever in London and Aruna Viswanatha in
Washington, Editing by Dan Wilchins and Alan Crosby in New York)
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