The British bank Barclays Plc has agreed to pay an additional $150 million
in order to resolve allegations by the New York Department of Financial
Services (NYDFS) that it rigged foreign exchange trading.
The NYDFS announced that Barclays consent to resolve allegations that it
rigged foreign exchange trading by
paying an additional $150 million in penalties. This fee is on top of the $485 million in penalties the
bank had to pay back in May over forex-related conduct, bringing the total
penalties to $635 million.
According to the New York regulator, Barclays misled clients by failing
to disclose that some forex trades were being rejected. Allegedly, Barclays
was using a featured called Last Look, which rejected certain client orders
that it determined would be unprofitable, but telling its customers that
the orders not going through was the result of technical glitches and
various other explanations.
Securities industry guidelines specifically warn banks against using Last
Look type programs to reject forex deals. Although Barclays had recently
updated its Last Look feature to comply with regulations, one of its trading
platforms had allegedly been left running on the old system, resulting
in 7% of Barclays total trading platforms filtering out client orders
based on profitability.
According to allegations made by the NYDFS, Barclays coached its employees
on what to say if customers questioned why their forex trades had been
rejected. One Barclays official allegedly wrote that employees should
“obfuscate and stonewall” if they were questioned, according
to the settlement document.