Fed Bans and Fines Former Barclays Trader in FX Manipulation

Former Barclays Plc trader Christopher Ashton, a member of “The Cartel” chat room where bank traders allegedly manipulated foreign-exchange rates, is being fined $1.2 million by the Federal Reserve and permanently banned from U.S. banking.

Ashton, previously global head of the FX spot business at Barclays in London, was accused of using electronic chat rooms to manipulate currency pricing benchmarks and disclose confidential information about customers to traders at other firms, the Fed said Monday. He’s the second former trader penalized by the agency. In July, the Fed bannedformer UBS Group AG trader Matthew Gardiner from the banking industry for life.

Both were associated with The Cartel -- the name given to a now notorious chat room used by senior traders at banks including Barclays, JPMorgan Chase & Co. and UBS to share information and agree on ways to try to move currency benchmarks including the so-called 4 p.m. fix. Last year, the Fed fined six banks for currency rigging and said the lenders had to cooperate in the investigation against employees.

At the time, the Fed said it was “prohibiting the organizations from re-employing or otherwise engaging individuals who were involved in unsafe and unsound conduct.”

Ashton has a right to formally challenge the Fed’s actions. Sara George, a lawyer for Ashton, declined to comment, as did a spokesman for Barclays.

‘Sterling Lads

“Ashton used these electronic chat rooms on a nearly daily basis to communicate with competitors,” the Fed said in its enforcement notice, which outlines how the agency believes the traders tried to manipulate rates and swap secrets. “Ashton and the other FX traders shared confidential and commercially sensitive information belonging to their banks and their banks’ clients in order to obtain an unfair competitive advantage over other market participants and their own clients.”

The Fed said Ashton also created a chat room called “Sterling Lads” for discussing trading in the British Pound, and alleged efforts at rate manipulation there.

Ashton’s bonus jumped to 725,000 pounds ($948,300) after he joined the live electronic discussions, from 380,000 a year earlier, showing his involvement helped boost his compensation, according to the Fed.

The trader has sued Barclays, saying he was fired unfairly and made a scapegoat after he blew the whistle on improper conduct in electronic chat rooms in 2012, a year before news of the scandal broke. The bank has said Ashton intentionally ignored its code of conduct by using offensive language and sharing confidential information.

Ashton complained in a 2015 disciplinary hearing that it wasn’t fair to hold his 2012 behavior to rules established after the scandal. When he was fired from the bank last year, he told the court that the bank’s former chief operating officer, Justin Bull, allegedly told him “life isn’t fair,” according to a witness statement made public in July.

Barclays Fine

Ashton was promoted in October 2013, four months after news broke that banks were manipulating the rate fixing process, according to the witness statement. He was suspended in November 2013.

“I was brave enough to put my head above the parapet to raise legitimate concerns about potential breaches of obligations and worked tirelessly to try to find solutions,” Ashton said in his court statement.

Ashton also went to court with a complaint that the U.K.’s Financial Conduct Authority failed to shield his identity in settlements with the banks. A judge rejected his argument, saying in a ruling published in January that it hadn’t been possible for people to figure out he was involved from the documents.

Barclays was fined $342 million in a May 2015 action that accused the London-based firm of unsafe banking practices related to foreign exchange markets.

 

In recent years, the Fed has become more aggressive in attempting to punish individuals for misconduct. Last year, it barred an employee of Goldman Sachs Group Inc. for stealing market information and five employees of Credit Suisse Group AG for helping clients evade taxes.

Source: Bloomberg