Three traders on trial in New York over allegations they fixed prices in the global foreign exchange market were on Tuesday wrapping up their defence, which their lawyers kept short after deciding the government’s star witness had done most of their job for them.
The witness, Matt Gardiner, a former trader at UBS and Standard Chartered, was the fourth member of a private chatroom that the men called “the cartel” and “the mafia”, where they allegedly conspired to manipulate the US dollar and euro exchange rate.
Mr Gardiner is co-operating with the US government and agreed to testify against his former peers in exchange for avoiding prosecution in the case.
But under cross-examination by the defence last week, he denied the men had any intent to commit a crime. “We didn’t think we were cheating anyone,” Mr Gardiner told the jury in federal court.
The trial, scheduled to last more than three weeks, now looks likely to wrap up in two instead. The jury could start deliberations as soon as Wednesday or Thursday.
The three London-based traders on trial in the case — Richard Usher, formerly of JPMorgan Chase; Rohan Ramchandani, formerly of Citigroup; and Christopher Ashton, formerly of Barclays — are accused of price-fixing between 2007 and 2013 by conspiring to keep competition out of the euro-dollar exchange market.
Prosecutors allege they worked together to influence daily euro-dollar “fixes”, where a benchmark price is created at which a large number of customer orders are filled. Manipulating the fix allowed the men to trade around it to boost their profits, the government claims.
The prosecution case used snippets of the men’s various chats, such as “one team one dream baby”, “I prefer we join forces”, and “Nice work, I made so much money ha ha”, to show how closely the defendants worked together. The men adopted nicknames in their chats: Mr Ramchandani was “Ruggy” and Mr Ashton was “RoboCop”; Mr Gardiner was “Fossil” because he was the oldest.
Lawyers for the defendants said prosecution was cherry-picking lines from their chatroom conversations, which they said did not show any wrongdoing.
They were aided in their defence by the testimony of Mr Gardiner under cross-examination.
“He has testified that he and the defendants shared certain information with each other, decided independently how to use that information, and refrained from trying to ‘deliberately trade to try and cause a loss’ to a trader who had disclosed an open position,” defence lawyers wrote in a letter to the judge last week, in which they argued to have the case thrown out.
This behaviour was common in the London FX market, the lawyers said.
“Defence counsel elicited illustrations of the prevalence and obviousness of these behaviours in the form of evidence that Mr Gardiner had behaved similarly with multiple other FX traders, and that these practices had been known of and approved by specific supervisors,” they said.
Attorneys for the accused began a short defence this week. Their final witness, a former Citigroup trader, Carly Hosler, testified that chatroom conversations and networking with traders at other banks were commonplace and helped her do her job, because it improved trading relationships. “It’s oxygen for a trader,” Ms Hosler told the court on Tuesday.
On Monday, Michael Melvin, a professor at Rady School of Management at the University of California in San Diego, and an expert in foreign exchange trading, testified that chats in which the traders engaged were common practice and expected by clients who looked to the banks for “market colour”.
Without that colour, spreads could widen and customers could get worse prices because the traders do not have insight into why a price is trending in a certain direction, he said.
If convicted, the foreign exchange traders face up to 10 years in jail.
They are the only individuals to be charged in a scandal that led to more than $10bn of fines for six banks. Four of the banks — JPMorgan Chase, Citigroup, Barclays and Royal Bank of Scotland — also pleaded guilty to offences, after an investigation by the UK’s Financial Conduct Authority.
The UK Serious Fraud Office dropped its probe in the case in 2016 after deciding that it did not have enough evidence for a successful prosecution.
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