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Ex-RBS trader arrested in forex probe
From the Financial Times of Fri, 19 Dec 2014 21:04:36 GMT

A former trader from the Royal Bank of Scotland has been arrested by the UK’s Serious Fraud Office in its criminal investigation into whether individuals rigged the $5.3tn-a-day foreign-exchange market, in a fresh acceleration of the worldwide probe.

It is the first arrest in the world as part of authorities’ investigations into whether forex, one of the biggest global financial markets, was rigged. Criminal investigations are under way in the US and Switzerland as well as the UK.

The individual was formerly employed by RBS, people familiar with the situation told the Financial Times.

The SFO confirmed in a brief statement late on Friday that it had arrested a man in Billericay, Essex, with the assistance of the City of London Police, but declined to give details as to which investigation the arrest concerned. RBS declined to comment.

The arrest comes a month after six banks paid a total of $4.3bn to US, UK and Swiss regulators to settle allegations that their weak controls failed to prevent traders attempting to manipulate forex.

The unprecedented global settlement included RBS, which paid a total of $634m to the UK Financial Conduct Authority and the US Commodity Futures Trading Commission.

The bank, which remains majority owned by the UK taxpayer, has put on leave at least three traders as a result of an internal investigation into whether its employees tried to rig forex.

The British bank used to be a heavy hitter in the forex market and ranked fourth in terms of market share globally as recently as 2009. But after a drastic shrinkage of the bank’s investment banking business it has dropped to rank eight in 2014.

Authorities’ probes into forex rigging will last well into 2015. Barclays pulled out of the global settlement at the last minute and is still under investigation.

One of the reasons it decided not to join the settlement was because the New York Department of Financial Services would not take part. DFS — which has taken a tough stance against errant banks — is investigating whether Barclays and Deutsche Bank used algorithms that could manipulate forex rates, people familiar with the situation told the Financial Times earlier this week.

The US Department of Justice is also expected to make its first findings in early 2015. Both the DoJ’s fraud and antitrust teams are investigating.

Additional reporting by Emma Dunkley in London

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