Fed bans, fines former Barclays trader in FX manipulation

Christopher Ashton was accused of using electronic chat rooms to manipulate currency pricing and disclose customer information. Photo / Getty Images

Former Barclays trader Christopher Ashton, a member of "The Cartel" chat room where bank traders allegedly manipulated foreign-exchange rates, is being fined $1.2 million by the Federal Reserve and permanently banned from US banking.

Ashton, previously global head of the FX spot business at Barclays in London, was accused of using electronic chat rooms to manipulate currency pricing benchmarks and disclose confidential information about customers to traders at other firms, the Fed said Monday. He's the second former trader penalised by the agency. In July, the Fed banned former UBS Group trader Matthew Gardiner from the banking industry for life.

Both were associated with The Cartel -- the name given to a now notorious chat room used by senior traders at banks including Barclays, JPMorgan Chase and UBS to share information and agree on ways to try to move currency benchmarks including the so-called 4 p.m. fix.

Last year, the Fed fined six banks for currency rigging and said the lenders had to cooperate in the investigation against employees.

At the time, the Fed said it was "prohibiting the organisations from re-employing or otherwise engaging individuals who were involved in unsafe and unsound conduct."

Ashton has a right to formally challenge the Fed's actions. Sara George, a lawyer for Ashton, didn't immediately respond to requests for comment. A spokesman for Barclays declined to comment.

"Ashton used these electronic chat rooms on a nearly daily basis to communicate with competitors," the Fed said in its enforcement notice, which outlines how the agency believes the traders tried to manipulate rates and swap secrets.

"Ashton and the other FX traders shared confidential and commercially sensitive information belonging to their banks and their banks' clients in order to obtain an unfair competitive advantage over other market participants and their own clients."

The Fed said Ashton also created a chat room called "Sterling Lads" for discussing trading in the British pound, and alleged efforts at rate manipulation there.

Ashton's bonus jumped to 725,000 pounds ($948,300) after he joined the live electronic discussions, from 380,000 a year earlier, showing his involvement helped boost his compensation, according to the Fed.

I was brave enough to put my head above the parapet to raise legitimate concerns about potential breaches of obligations and worked tirelessly to try to find solutions.

The trader has sued Barclays, saying he was fired unfairly and made a scapegoat after he blew the whistle on improper conduct in electronic chat rooms in 2012, a year before news of the scandal broke. The bank has said Ashton intentionally ignored its code of conduct by using offensive language and sharing confidential information.

Ashton complained in a 2015 disciplinary hearing that it wasn't fair to hold his 2012 behaviour to rules established after the scandal. When he was fired from the bank last year, he told the court that the bank's former chief operating officer, Justin Bull, allegedly told him "life isn't fair," according to a witness statement made public in July.

Ashton used these electronic chat rooms on a nearly daily basis to communicate with competitors.

Ashton was promoted in October 2013, four months after news broke that banks were manipulating the rate fixing process, according to the witness statement. He was suspended in November 2013.

"I was brave enough to put my head above the parapet to raise legitimate concerns about potential breaches of obligations and worked tirelessly to try to find solutions," Ashton said in his court statement.

Barclays was fined $342 million in a May 2015 action that accused the London-based firm of unsafe banking practices related to foreign exchange markets.

In recent years, the Fed has become more aggressive in attempting to punish individuals for misconduct. Last year, it barred an employee of Goldman Sachs for stealing market information and five employees of Credit Suisse Group for helping clients evade taxes.