U.S. Metals Probe, Yellen on Currency, Japan Banks: Compliance
(Bloomberg) — The U.S. Justice Department is investigating whether the world’s biggest banks manipulated prices of precious metals such as silver and gold as the government pushes to wrap up probes into currency-rate rigging, according to people with knowledge of the matter.
At least 10 banks, including Barclays Plc, JPMorgan Chase & Co. and Deutsche Bank AG, are being probed by the Justice Department’s antitrust division, said one of the people, who asked not to be identified because the matter is confidential.
Precious metals have come under scrutiny as authorities around the world investigate allegations that other financial benchmarks have been rigged. While the Justice Department’s probe is in its early stages, the Swiss regulator included the issue in a November settlement with UBS Group AG over currency- rate manipulation. British and German regulators have looked into the gold price-setting process and found no evidence it was rigged.
The U.K. Financial Conduct Authority is scrutinizing firms’ behavior in relation to precious metals as part of continuing supervisory work spurred by the foreign-exchange probe. While the FCA doesn’t have authority over physical markets, it does regulate derivatives. It ordered Barclays to pay 290 million pounds ($448 million) in May for a former trader who artificially suppressed the price of gold in 2012 using fake positions to avoid triggering a payout to a client.
HSBC Holdings Plc disclosed Monday that the Justice Department and U.S. commodities regulators have sought documents from the bank on precious-metals dealings. The London-based bank said it is cooperating in the probes.
Spokesmen for the Justice Department and the Commodity Futures Trading Commission declined to comment. Chris Hamilton, an FCA spokesman, declined to comment on its reviews.
The CFTC looked into the silver market after receiving complaints and closed the probe in 2013, saying there was no basis for it to take action.
While the CFTC and FCA have reached currency-rigging settlements with some banks, the Justice Department’s inquiries are still under way. These foreign-exchange manipulation probes are further along than the precious-metals case. U.S. Attorney General Eric Holder said after the initial round of currency deals announced in November that investigations should conclude “relatively soon.”
The banks under investigation also include Credit Suisse Group AG, UBS, Goldman Sachs Group Inc., Societe Generale SA, Bank of Nova Scotia and Standard Bank Group Ltd., the person said. The Wall Street Journal reported late Monday that those banks were being investigated. The banks either declined to comment or didn’t immediately respond to requests for comment.
Interviews/Commentary
Yellen Says Currency Manipulation Must Be Addressed
Currency manipulation to give one country an advantage over another is “inappropriate” and needs to be addressed, Federal Reserve Chair Janet Yellen said.
Still, introducing sanctions for such conduct into trade agreements could hamper or even “hobble” monetary policy, she said.
She spoke in response to a question during her testimony Tuesday before the Senate Banking Committee in Washington.
For the video, click here.
Comings and Goings
Japan’s Lower House Approves Yutaka Harada for BOJ Board Seat
Japan’s lower house of parliament approved Yutaka Harada for a seat on the Bank of Japan’s policy board.
If approved by the upper house, where a vote has not yet been scheduled, Harada would attend the policy board meeting scheduled for April 7 to 8.
Prime Minister Shinzo Abe’s government nominated Harada, an economics professor and proponent of reflationary monetary policy. Abe’s Liberal Democratic Party holds majorities with its coalition partner in both houses of parliament.
Separately, Japan’s financial regulator next year will propose legislation to change bank holding company rules to allow entry into the information technology business, Nikkei reported.
–With assistance from Akiko Nishimae in New York, Toru Fujioka in Tokyo and David McLaughlin and Tom Schoenberg in Washington.
To contact the reporter on this story: Carla Main in New Jersey at cmain2@bloomberg.net. To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net. David Glovin, Charles Carter
