New York’s Financial Regulator Lawsky Opens Currency Trading Probe

The New York Department of Financial Services launched an investigation regarding the foreign currency trading practices of a number of banks, according to report from Bloomberg based on information obtained from a person with knowledge about the action of the regulator.

New York's Financial Regulator Lawsky Opens Currency Trading Probe

NY top financial regulator demands documents

According to the report, Benjamin Lawsky, the superintendent of the New York Department of Financial Services ordered more than a dozen banks including Deutsche Bank AG (NYSE:DB) and Goldman Sachs Group Inc (NYSE:GS) to submit documents related to their currency trading practices.

The state’s top financial regulator also demanded Lloyds Banking Group PLC (NYSE:LYG) (LON:LLOY), Royal Bank of Scotland Group plc (NYSE:RBS) (LON:RBS), and Standard Chartered PLC (LON:STAB) (LON:STAN) to provide information regarding the matter.

The source requested anonymity because the investigation has not yet been disclosed to the public. Lawsky wants to find out whether traders manipulated the currency rates, and some of the information he requested includes e-mails and instant messages. It was not certain as to when the financial regulator sent his request for information, but the banks are responding in various stages, according to the person.

Worldwide investigation

Last June, Bloomberg reported that some employees at certain banks shared information regarding their currency positions with counterparts at other financial institutions. Since the reports, banks have suspended or terminated the employment of at least 20 individuals.

The bank’s foreign currency rigging allegations are currently being investigated by agencies and regulators on three continents. The United States Department of Justice (DOJ), the Commodity Futures Trading Commission (CFTC), and the Serious Fraud Office and Financial Conduct Authority in the United Kingdom are already conducting their own investigation regarding the issue.

Enforcer with a zeal

Lawsky became famous after his recent move to hold hearings about regulating the virtual currency, Bitcoin. He was a former federal prosecutor, and a key ally of New York Governor Andrew Cuomo. He recommended to revoke the banking license Standard Chartered PLC (LON:STAB) (LON:STAN) on allegations that it violated U.S. sanctions related to dollar transfers to Iranian clients.

Bartlett Naylor, a lobbyist for Public Citizen consumer group, described Lawsky as a “law enforcer with a zeal” ready to deploy numerous weapons on behalf of the law and consumers.