Former Barclays Trader Charged By DoJ With Market Manipulation

The United States Department of Justice (DoJ) alleges that Robert Bogucki, the ex-head of the New York foreign exchange trading at Barclays Plc has engaged in fraud. He was charged for his supposed role in defrauding Hewlett-Packard (HP) with what is known as a front-running scheme. The 45 year old Bogucki becomes the third trader to face charges in the United States.

The ex-forex trader faces six counts of wire fraud and one count of conspiracy to commit wire fraud. He appeared on Wednesday in a court in Brooklyn, New York to face those charges.

The alleged manipulation of foreign exchange options took place in September 2011 before Hewlett-Packard engaged in a huge trade with Barclays Bank. The DOJ indictment also claims that Bogucki has misused information he got from HP prior to the company's planned deal with Barclays.

In a statement, Assistant Attorney General John P. Cronan said

Bogucki and others allegedly not only betrayed his client’s confidences, but also risked undermining public trust in the foreign-exchange options market. We remain committed to protecting American interests by investigating and prosecuting sophisticated schemes

The Justice Department further alleges in its statement that Bogucki directed options trading for the sake of lowering the price of volatility, which in turn is an important metric that influences currency options value. This automatically benefitted Barclays at HP’s expense once the deal was carried out. Barclays along with four other global banks were ordered to pay a combined $2.5 billion in penalties to the DOJ in 2017 after the four banks admitted to currency rate rigging.

HP hired Barclays for the sake of executing $8.3 billion worth of forex options as part of their agreement. Bogucki in light of this info made trades ahead of the deal to benefit Barclays at the expense of Hewlett-Packard. American authorities have been gunning for criminal prosecutions after carrying out a worldwide crackdown on currency rigging that led to these global banks paying billions in penalties.

This indictment is the second one brought against the head of the foreign exchange department of major international bank. This continues the United States investigations of global foreign exchange market fraud and scams. The first indictment was against HSBC Executive Mark Johnson, who was found guilty by a jury in October 2017 for front-running a $3.5 billion currency trade deal concerning Cairn Energy Plc. in 2011.

---