Banks face more forex charges
• Affidavit outlines further allegations against Standard New York and Bank of America involving rigging rand-dollar exchange market
The Competition Tribunal on Tuesday published a supplementary affidavit in the Competition Commission’s case against 18 banking entities for rigging the forex market, adding further charges against two banks.
The Competition Tribunal published a supplementary affidavit on Tuesday in the Competition Commission’s case against 18 banking entities for rigging the forex market, adding further charges against two banks.
The affidavit outlines further allegations against Standard New York, Standard Bank’s offshore securities subsidiary, and the Bank of America involving the rigging of the rand-dollar exchange market.
The affidavit came after the commission said initially it should have been made public in the first week of April, following the elapsing of the tribunal’s deadline for supplementing affidavits at the end of March.
“The commission supplemented [the initial complaint],” Makgale Mohlala, head of the regulator’s cartels division, said at the time. “The commission did not give any evidence.”
The supplemented referral should have been made public, Mohlala said.
It is understood the tribunal was still awaiting the green light from one of the banks before it could make the documents public last week. The documents — which included the supplementary affidavit and a clarification that Barclays plc and subsidiaries Absa and Barclays Capital, which had applied for leniency, would not be prosecuted — were e-mailed to the media on Tuesday afternoon.
FURTHER COLLUSION
In an affidavit signed on March 31 and received by the tribunal on the same day, commission inspector Mfundo Ngobese said it had become aware of “other collusive conduct” in addition to that described in its initial complaint against the banking entities, which included Absa, Investec, Standard Bank and Standard New York.
“In addition to the respondents referred to in … the founding affidavit, Standard New York also engaged in [an] agreement to coordinate trading by pulling and holding trading activities on the Reuters platform.” The supplementary affidavit did not name the Standard New York trader or traders involved in coordinating trades. Standard Bank spokesman Ross Linstrom said the bank had no comment on the new allegations.
In the original complaint, 11 banks including Absa, Investec and Citibank were accused of co-ordinating trading times from at least 2010. This enabled them to avoid driving prices up or down when a trader had a large order, for example. Smaller trades would then follow.
The Bank of America, represented by trader Gavin Cook, was added to the list of banks accused of posting fake bids and offers.
SUBSTANTIAL PROFITS
The bids (prices paid by foreign currency dealers at these banks on the market) and offers (the price subsequently quoted to customers wanting to buy either the dollar or rand) were kept at a wide enough margin to generate substantial profits.
Ngobese said the Competition Tribunal had jurisdiction in the matter, something foreign banks such as JP Morgan Chase and HSBC were challenging.
Ngobese said in the supplemented affidavit the tribunal had jurisdiction because the Competition Act applied to all economic activity within SA, or which had an effect on SA, except for collective bargaining or agreements defined by the Constitution or Labour Relations Act.
In a hearing convened to confirm Citibank’s R69.5m fine to settle the matter with the commission, Mohlala said the other banks wanted to file exceptions to the tribunal’s jurisdiction to adjudicate the matter. The respondents would now decide if they still wanted to pursue their jurisdiction objections or whether they were satisfied with the supplements. Should exceptions be filed, they would be set down for hearing in May or June, he said.
Mohlala said the Citibank settlement strengthened the commission’s evidence against the other banks.