Daily fraud update: 3rd October

Charges settled in BGC Financial forex case

An American firm called BGC Financial, which was accused of perpetrating foreign exchange fraud has had a large penalty applied to it.

Another firm, GFI Securities, has also been given a fine.

The firms were hit by the accusations after claims that their foreign exchange options traders had lied to potential investors.

Those on the forex desks at the firm allegedly told investors that it was possible for the relevant bids to be executed, and that these had gone ahead.

However, this was not always the case – leading to accusations of false representation.

As part of the settlements from the Commodity Futures Trading Commission (CFTC), BGC Financial will need to pay $15m in penalties.

GFI will need to shell out $10m as a result of the accusations.

They have also been given “cease and desist” orders to stop breaking the CFTC’s regulations and the Commodity Exchange Act.

In particular, the firms are accused of presenting false traders to their clients.

They are believed to have operated a sophisticated system in which clients would see bids appear and disappear on their own screens in an apparent attempt to create a situation in which the clients were misled.

In a statement, the director of enforcement at the CFTC, James McDonald, reiterated the organisation’s commitment to “protecting the integrity” of these markets.

“Brokers and other intermediaries play a critical role in our markets. The CFTC is committed to protecting the integrity of our markets by ensuring they are held accountable for fraudulent misconduct”, he said.

However, this is far from the only case involving these two firms.

A distinct process against the two firms, this time led by the attorney general of New York, will see both firms pay out another $12.5m on top of the penalties they have been hit with elsewhere.

This comes from violations they are accused of making over the Martin Act, a separate law.

Forex trader accused of rigging set to sue Citigroup

A foreign exchange trader who formerly worked at Citigroup and who was accused of large scale fraud has announced he will sue the bank.

Rohan Ramchandani, who used to be the Europe-wide lead for the American corporation’s foreign exchange spot markets, accuses Citigroup of lying about him during an investigation into his conduct.

Ramchandani was accused of setting benchmark exchange rates in a way that was beneficial to them and unfair to the markets, alongside two others.

He was subsequently found not guilty.

The lawsuit has been filed in New York City.

According to an excerpt from the complaint published in the UK press, Ramchandani was the victim of “fabricated” information.

“Ultimately, Citi quite literally fabricated an antitrust case for the United States Department of Justice against Ramchandani based upon knowingly false allegations that he engaged in market ‘manipulation’ and ‘collusion’”, the complaint said.

However, Citigroup has responded robustly to the claims.

“Ramchandani’s claims of malicious prosecution are without merit and we will contest them vigorously”, a spokesperson said.

Chris Lee

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