By Diane Bartz
WASHINGTON Oct 11 The U.S. Justice Department
is making inquiries into allegations of foreign exchange rate
manipulation centered on the Swiss franc, but has left the heavy
lifting to Europe, according to a source familiar with the
The Justice Department spoke with participants in the probe
but is letting officials in Europe take the lead in any
investigation, said the source, who could not be named to
protect business relationships. "Everybody's been interviewed,"
the source said.
Two traders from an unnamed Swiss bank have been let go from
their jobs in connection with the allegations, said the source.
Investigations into the $5 trillion-a-day market have
broadened, with authorities in Switzerland and Britain looking
into whether traders at banks sought to manipulate benchmark
foreign currency rates.
Royal Bank of Scotland has already handed Britain's
financial regulator instant messages sent by a former currency
trader to counterparts at other banks, Reuters reported earlier
The Justice Department declined comment on any U.S. inquiry.
Regulators and investors are concerned about the integrity
of financial benchmarks in the wake of a global investigation
into the rigging of interest rates.
So far four financial firms, including Switzerland's largest
bank UBS, have been fined about $2.7 billion and seven
men have been charged as a result of the probes.
The Swiss Financial Market Supervisory Authority, FINMA,
said earlier this month that it was "conducting investigations
into several Swiss financial institutions in connection with
possible manipulation of foreign exchange markets."
FINMA said it was working with regulators elsewhere, but did
not identify them or the target banks.
With probes underway into benchmarks for crude oil and the
swaps market as well as Libor interest rates, global regulators
recently published principles to improve the transparency and
oversight of hundreds of financial benchmarks, covering
everything from interest rates to gold.
Foreign exchange benchmark rates, WM/Reuters, are calculated
using actual trades hourly through most of the trading day, with
closing rates "fixed" at 4 p.m. in London.
Many banks provide a service to their customers where they
guarantee to trade at the WM/Reuters rates. It is useful for
buy-side investors like large funds to value and benchmark their
portfolios, because most main stock and bond index compilers use
these rates for their calculations.
The WM/Reuters service is a joint venture between the WM
Company and Thomson Reuters.