FBI Busts Alleged FX Trading Scam

Bloomberg reports that US prosecutors have charged foreign exchange dealers at UBS, JP Morgan and other firms with conspiracy and securities fraud in connection with alleged activities in the $1.2 trillion-a-day foreign currency market.

According to the news agency, up to 47 people were arrested Tuesday after an 18-month undercover investigation. The alleged wrongdoing is thought to go back for possibly as long as 20 years. FBI agents are said to have made raids on a number of offices Tuesday and came calling with guns and handcuffs.

The Wall Street Journal reports that a UBS employee was cuffed and removed from the firm's Stanford office. Three ICAP brokers were said to have been arrested in Jersey City and, according to The Financial Times, a Collins Stewart employee in New York was taken into custody. The Times says that an employee from Dresdner and one from Societe Generale have also been implicated.

Details are emerging about some kind of alleged kick-back scheme, although, at the time of writing, the full particulars of what is alleged to have transpired are not known. Some of the alleged illegal activity is said to have occurred in a foreign exchange 'boiler room' in the World Financial Center in New York. Federal agents are believed to have infiltrated this area and secretly filmed what was going on there.

Manhattan US Attorney Jim Comey said at a press conference that he believed that over 1,000 victims suffered as a result of the alleged scam, from small investors to large banks. Millions of dollars are said to be involved.

UBS spokesman Rudolf Buergin is quoted in the press as saying: 'We are conducting our own investigation to determine how this happened'. Both JP Morgan and UBS have said that they will not be impacted financially by the alleged activity.

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