New York’s Top Financial Regulator Investigates Currency Trading

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Benjamin M. Lawsky, New York State’s top financial regulator.Credit Ozier Muhammad/The New York Times

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The business of trading currencies is in a state of flux as top executives leave and traders are suspended or fired in the face of investigations into potential manipulation of the $5 trillion-a-day foreign exchange market.

The latest regulator to start an inquiry into whether more than a dozen banks manipulated the price of foreign currencies is New York State’s top financial regulator, Benjamin M. Lawsky.

His agency, the Department of Financial Services, recently sent the banks — including Credit Suisse, the Royal Bank of Scotland, Deutsche Bank and Standard Chartered — a request for documents about the suspected manipulation, according to a person briefed on the matter.

Separately, two senior foreign exchange executives are stepping down.

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Citigroup office in London's financial district.Credit Oli Scarff/Getty Images

Anil Prasad, who has served as global head of Citigroup’s foreign exchange and local markets operations since 2007, is leaving the bank to “pursue other interests,” according to an internal memorandum reviewed by DealBook.

Steven Cho, global head of major currency spot and forward trading at Goldman Sachs in New York, is retiring from the investment bank, according to a person briefed on the matter.

It is not unusual for executives who are considering making a change to leave at this time of year. The previous year’s bonus compensation has already been paid and banks, looking to cull their executive ranks, often encourage older or underperforming employees to move if they are not in a company’s future plans.

“Anil informs me that he has been considering this for some time, and feels the time is right for him to move on to the next stage of his career,” Paco Ybarra, Citigroup’s global head of markets and securities services, wrote in the memo.

Mr. Prasad will leave the post in March, and his successor is expected to be named in the coming weeks. He started with Citigroup in 1986 and, aside from a three-year stint with Natwest Capital Markets, had been with the bank for most of his career.

“Anil’s decision is his own and entirely unrelated to the ongoing FX investigations,” a person with knowledge of the matter said.

Mr. Cho joined Goldman Sachs in 1996 in London and later relocated to New York. He has been a partner at the bank since 2010.

Many of the world’s largest banks, including Citigroup and Goldman Sachs, have acknowledged that they are facing inquiries from regulators in Britain, the United States and other parts of the world.

On Tuesday, the chief executive of Britain’s Financial Conduct Authority, Martin Wheatley, said the foreign exchange manipulation accusations are “every bit as bad as they have been with Libor.” Banks have paid billions of dollars of fines in the last two years stemming from the manipulation of the London interbank offered rate, or Libor, and other global benchmark interest rates.

More than a dozen currency traders at some of the world’s largest banks, including Barclays, JPMorgan Chase and UBS, have been placed on leave over questions about whether they colluded to manipulate benchmark currency rates.

Deutsche Bank, the largest player in the currency trading market with a share of about 15.2 percent, fired the head of its emerging markets foreign exchange trading desk in New York and two traders this week, according to a person with knowledge of the matter.

In January, Citigroup fired the head of its European spot currency trading desk after he had been placed on leave last year.

Neither the banks nor any of the traders who have been suspended or fired have been accused of wrongdoing.

The investigation by Mr. Lawsky, known for taking a hard line with Wall Street in the past, is the first by a state regulator to scrutinize currency trading. His jurisdiction covers any bank operating with a New York State charter. His involvement was reported earlier by Bloomberg News.

Ben Protess contributed reporting.

Correction: February 5, 2014
An earlier version of this post misidentified the year when Anil Prasad began serving as global head of Citigroup’s foreign exchange and local markets operations. He began in that role in 2007, not 2008.