Amid an investigation into the dubious practices of foreign exchange traders at Citigroup (NYSE:C) and HSBC (NYSE:HSBC), both banks have suspended and/or fired numerous employees. The latest round of internal actions involves multiple suspensions as U.S. and U.K. regulators widen their focus to include scores of Forex traders at the world’s biggest banks, The Wall Street Journal reports.
According to multiple sources, Citigroup confirmed on January 17 that it had suspended two currency traders working in New York and London locations a week after the bank’s firing of its head of Forex trading in London. Citi’s internal investigations prompted the move following a sweep by regulators through the bank’s London offices.
HSBC also confirmed it had suspended two traders, of which one fronts the bank’s currency trading operation, following the revelation they may have been involved in market manipulation. Chatrooms populated by currency traders for the banks in question bore names such “The Cartel” and “The Mafia.” Regulators in the U.S. and England are looking deeper into the group’s activities to determine whether evidence of currency manipulation and price fixing exists.
According to Bloomberg News, the four employees on leave from HSBC and Citigroup puts the total number at seventeen traders either fired or disciplined since the investigations began in June 2013. Numerous Deustche Bank (NYSE:DB) employees were also suspended late in 2013 in connection with the same probe.
Citigroup dropped over 4 percent in value in the trading week that ended January 17. Earnings-per-share figures were below expectations after poor fixed-income trading revenue was reported early on January 16. Both JPMorgan (NYSE:JPM) and Bank of America (NYSE:BAC) posted stronger results from the same trading divisions.
Citi CFO John Gerspach said he believed the bank’s mortgage division revenues would hold steady in the coming quarters after the divisions enjoyed a measure of stabilization in the final quarter of 2013. Meanwhile, Merrill Lynch analysts provided a bull case for Citigroup following the earnings report on the basis of its overall growth in lending.