Barclays Enters Consent Order to Pay Additional $150 Million to Resolve Forex Rigging Allegations
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.