Three former London-based bank traders were acquitted on charges that they conspired to fix prices in the $5tn-a-day global foreign exchange market.
After a two-week trial in New York, a jury spent less than a day deliberating on a single charge of price-fixing against each of the defendants: Richard Usher, formerly of JPMorgan Chase; Rohan Ramchandani, formerly of Citigroup; and Christopher Ashton, formerly of Barclays.
The loss is a serious setback for the US Department of Justice, which, alongside the UK Financial Conduct Authority, has extracted more than $10bn in fines from settlements with banks over the foreign exchange scandal.
“It’s the end of a five-year nightmare,” said Jonathan Pickworth, attorney for Mr Usher. “Richard can go home now to his family. It took the jury three hours to work out what the DOJ failed to see for five years.”
Mr Usher would be getting his passport back and flying home to London later on Friday, the attorney added.
Mr Usher, Mr Ramchandani and Mr Ashton are the only people to have been put on trial as a result of the global investigation into alleged rate-rigging in the foreign exchange markets. The UK’s Serious Fraud Office dropped its probe in the case in 2016 after deciding that its evidence could not form the basis of a successful prosecution.
The men’s defence was boosted by the testimony of Matt Gardiner, the government’s star witness and a former trader at UBS and Standard Chartered. Mr Gardiner was the fourth member of a private chatroom that the men at times called “the cartel” and “the mafia”.
Mr Gardiner spoke kindly of the defendants in his testimony, and denied the men had any intent to commit a crime, telling the jury “we didn’t think we were cheating anyone”.
Texts of the traders’ chatroom banter were at the heart of the government’s case, which sought to show the level to which the men confided about the positions of their clients, bragged about wins, and co-ordinated their trading so as not to harm the others, especially around the spike of trading activity that happened when the daily WM Reuters rate “fix” was set at 4pm in London every day.
The men used code words for clients, and adopted nicknames: Mr Ramchandani was “Ruggy”, Mr Ashton was “RoboCop”, and Mr Gardiner was “Fossil” because he was the oldest. Mr Gardiner testified that the name of the chat group changed constantly based on inside jokes, and that the “cartel” moniker was one of many and based on a joke by a hedge fund manager client.
On the back of the testimony of Mr Gardiner, the defence only called two witnesses to the stand in the case: a former Citigroup trader, Carly Hosler, who worked with Mr Gardiner and Mr Ramchandani, and Michael Melvin, a professor at Rady School of Management at the University of California at San Diego, an expert in foreign exchange trading.
Mr Melvin, who spent more than a decade as a foreign exchange specialist, managing money for institutional investors at Barclays Global Investors, which was bought in by BlackRock before returning to academia two years ago, testified that the WMR rate could not be manipulated. He also told the jury that the chats in which traders engaged with each other were common practice and expected by clients, who relied on them for “market colour.”
Ms Hosler testified that chatroom conversations and networking with traders at other banks were commonplace and helped her do her job. She estimated that during her time as a trader, she was in around 20 to 25 permanent chats that often included her peers at other banks.
Ms Hosler, formerly Carly McWilliams, won an unfair dismissal case against Citigroup in London after she became one of the dozens of people fired over the forex-rigging scandal while she was on maternity leave.
The acquittal of the traders highlights the difficulties prosecutors have faced in putting individuals in jail for alleged wrongdoing in the financial sector.
Last year, two former Rabobank traders prosecuted on charges of rigging the London interbank offered rate had their convictions vacated after an appeal. Earlier this month, two former Deutsche Bank traders were found guilty in another Libor case but are continuing to fight the charges and are likely to appeal.
The forex case marked a new approach for the DoJ, which had prosecuted Libor cases using traditional charges of fraud. In the case against Mr Usher, Mr Ramchandani and Mr Ashton, the government instead based its arguments in competition law, alleging violations of antitrust statutes.
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