BNP Paribas to Pay $350 Million to Settle New York Forex Allegations -- Update

By Nicole Hong Features Dow Jones Newswires

BNP Paribas SA agreed on Wednesday to pay a $350 million penalty to resolve allegations by New York's banking regulator that foreign-exchange traders at the French bank engaged in collusion to manipulate currency rates.

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The New York Department of Financial Services said deficient oversight at BNP Paribas "allowed nearly unfettered misconduct" among traders and salespeople in the bank's foreign-exchange business, in violation of New York banking laws.

The investigation focused on misconduct that began a decade ago, involving at least a dozen BNP Paribas employees around the world.

The Department of Financial Services found that from 2007 until 2013, currency traders at BNP Paribas in New York and other big trading hubs participated in chat rooms where they colluded to widen spreads, manipulate the price at which daily benchmark rates were set and hide markups from customers -- with the ultimate goal of artificially increasing profits.

In particular, according to regulators, one trader at the bank's New York branch labeled the chat group "cartel" and worked with colleagues at other large banks to conduct fake trades during light trading hours that caused currency prices to spike upward or downward. The trader manipulated prices and spreads in several currencies, including the South African rand and Turkish lira.

The investigation also found that BNP Paribas traders improperly exchanged confidential customer information with employees at other banks, which led to traders adjusting prices to unfairly profit at these customers' expense.

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Under the terms of the consent order, the bank admitted to the regulator's allegations.

"BNP Paribas deeply regrets the past misconduct which led to this settlement," the bank's spokespeople said in a statement, adding that the bank has since implemented new measures to strengthen its compliance.

The bank has already fired several employees as part of the fallout.

Wednesday's settlement is part of a long-running probe by regulators around the world into possible manipulation of foreign-exchange rates. The investigation has led to the suspension or firing of traders at around a dozen banks in the largest currency dealing hubs.

In 2015, five banks pleaded guilty to fixing currency prices, and the Justice Department has charged at least six individuals as part of the probe.

Write to Nicole Hong at nicole.hong@wsj.com

(END) Dow Jones Newswires

May 24, 2017 14:34 ET (18:34 GMT)