NEW YORK: New York state bank regulators fined BNP Paribas $350 million for “illegal, unsafe and unsound” currency trading practices that included use of secret hand signals to dupe customers, officials announced Wednesday.
The charges involved “significant, long-term violations,” including fake trades, manipulating currency prices, using confidential information to profit at the customers’ expense, and misleading customers, New York’s Department of Financial Services said in a statement.
From 2007 to 2011, the bank “paid little or no attention to the supervision of its foreign exchange trading business, allowing BNPP traders and others to violate New York State law over the course of many years and repeatedly abused the trust of their customers,” Financial Services Superintendent Maria T. Vullo said.
BNP Paribas, headquartered in Paris, France, does business in at least 75 countries, and its New York branch is supervised by the DFS.
Among the violations uncovered, investigators said, BNPP was “misleading customers by hiding markups on executed trades, including by using secretive hand signals when customers were on the phone; or by deliberately ‘underfilling’ a customer trades, in order to keep part of a profitable trade for the Bank’s own book.”
The scheme involved trading in several currencies, including the Japanese yen, South African rand, Hungarian forint and Turkish lira, and traders worldwide were involved in covering up the misdeeds.
As part of the settlement, the bank will submit plans to improve oversight and compliance with laws regarding currency trading, DFS said.
The bank said it “deeply regrets the past misconduct which led to this settlement, which was a clear breach of the high standards on which the Group operates.”
BNPP “has proactively implemented extensive measures to strengthen its systems of control and compliance,” including increasing resources and staff dedicated to these functions and “extensive staff training,” the bank said in a statement.