On Friday, May 4, Judge Richard M. Berman of the New York Southern District Court signed an Order denying the former FX traders Christopher Ashton, Rohan Ramchandani, and Richard Usher’s motion to dismiss.
Christopher Ashton was a EUR/USD trader for the UK affiliate of Barclays PLC from 2011 to 2015. Rohan Ramchandani was a EUR/USD trader for the UK affiliate of Citicorp from 2004 to 2014. Richard Usher was a EUR/USD trader for the UK affiliate of The Royal Bank of Scotland PLC from 2004 to 2010, and for the UK affiliate of JPMorgan Chase & Co from 2010 to 2013.
The Indictment alleges that the defendants “participated in a combination and conspiracy to suppress and eliminate competition for the purchase and sale of EUR/USD in the United States and elsewhere by fixing, stabilizing, maintaining, increasing, and decreasing the price of, and rigging bids and offers for, EUR/USD in the FX Spot Market.”
On November 17, 2017, the defendants filed a motion to dismiss the Indictment arguing that the Indictment “fails to allege that Defendants competed on the same side of the FX spot market, a necessary condition to describing a horizontal restraint among competitors”, as well as that “courts lack the ‘considerable experience’ with the practices intrinsic to FX trading that is necessary to support a conclusion that the conduct alleged here is unlawful” under the Sherman Act.
On May 4 Judge Berman noted that Courts have long held that horizontal price-fixing conspiracies are illegal under the Sherman Act when they include agreement among competitors “formed for the purpose and with the effect of raising, depressing, fixing, pegging, or stabilizing the price.” He found that the ex-traders’ alleged behavior constitutes a horizontal restraint of trade because it is an agreement among competitors at the same level of the market, i.e., they were traders working for dealers in the FX spot market who agreed on the way in which they will compete with one another.
The Judge also found that the defendants had notice or fair warning that their conduct was criminal. The principle underlying “fair warning” is that “no man shall be held criminally responsible for conduct which he could not reasonably understand to be proscribed.”
The defendants were investigated for this very same conduct in the UK and the defendants were specifically warned by the UK’s Serious Fraud Office that its decision to not pursue prosecution “does not reflect or impact on any decision which might be taken by any other agency, whether domestic or overseas, in relation to the same conduct.” Moreover, the Judge noted that it is widely understood that price fixing is unlawful conduct subject to prosecution, including price fixing in the FX market.
The trial against the former traders is scheduled to start on October 1, 2018. They have all pled “not guilty” to the allegations against them.
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