BNP Paribas has been slapped with a $350m fine by New York’s state banking regulator, which found a long pattern of “nearly unfettered misconduct” in the bank’s foreign-exchange trading business.
Traders at France’s biggest bank colluded with rivals to manipulate FX prices and benchmark rates, carried out fake trades and improperly shared details on customer orders with traders at other big banks, according to the Department of Financial Services.
The misconduct, which lasted from 2007 to 2013, involved at least a dozen BNP Paribas employees in New York and other key foreign exchange trading hubs, including London and Tokyo. Those individuals have quit, been sacked or otherwise disciplined, DFS said.
Wednesday’s fine and consent order, announced around noon in New York, was the regulator’s first FX-related action and could lead to more, according to a person familiar with its supervisory programme.
“Participants in the foreign exchange market rely on a transparent and fair market to ensure competitive prices for their trades for all participants,” said Maria Vullo, the DFS superintendent. “Here [BNP Paribas] paid little or no attention to the supervision of its foreign exchange trading business, allowing … traders and others to violate New York State law over the course of many years and repeatedly abused the trust of their customers.”
In one example given by DFS, a trader then located in BNP’s New York branch employed a variety of schemes to manipulate prices and spreads in several currencies, including the South African rand, Hungarian forint and Turkish lira. The trader explicitly labeled the group a “cartel” in his chats, and called the group of traders that were colluding with him to manipulate the price of the South African rand “ZAR Domination.”
In Tokyo, meanwhile, one trader joined with seven other traders at rival banks to improperly share customer information in the trading of yen. This group developed an elaborate codebook, which it called “We Reign,” and used personal emails to distribute it to evade compliance.
BNP Paribas said in a statement:
“The conduct which led to this settlement occurred during the period from 2007 to 2013. Since this time, BNP Paribas has proactively implemented extensive measures to strengthen its systems of control and compliance. The group has increased resources and staff dedicated to these functions, conducted extensive staff training and launched a new Code of Conduct which applies to all staff.
BNP Paribas deeply regrets the past misconduct which led to this settlement, which was a clear breach of the high standards on which the group operates.
Conducting its business in a responsible and ethical manner is a cornerstone of BNP Paribas’ values and the group will continue to make improvements to ensure that it delivers on its responsibilities to all its stakeholders.”