Shock As Wall Street Trader Pleads Guilty To Criminal Conduct - Finally!!

I nearly fell of my chair this morning when I read that someone on Wall Street actually plead guilty to participating in a conspiracy to fix prices. Jason Katz admitted to conspiring to manipulate currency prices, becoming the first individual to admit criminal conduct related to the massive fraud in the foreign exchange markets.

In 2015, four of Wall Street's biggest banks admitted to the same currency manipulation scheme and paid fines totaling about $10 billion. That may seem like a lot of money especially when you consider that the total foreign exchange revenue for the top 10 players in the market was about $12 billion that year. In 2008, however, that total was around $22 billion. The problem is that this fraud went on for over five years, meaning that these four firms probably still came out ahead in the end. And, by and large, all these banks have continued to continue with business as usual even after the fines and the guilty please. To quote the Times article, "For the banks, though, life as a felon is likely to carry more symbolic shame than practical problems. Although they could be barred by American regulators from certain activities, the banks scrambled behind the scenes to persuade those regulators to grant exemptions. That process, which delayed the Justice Department’s announcement by a week, already led to the Securities and Exchange Commission providing a number of waivers that allow the banks to conduct business as usual."

The extent of this fraud is hard to believe. Ever day, for over six years, Katz and his cohorts in other firms blatantly manipulated foreign exchange prices. The traders created online chat rooms where they openly described themselves as "the cartel" or "the mafia" and colluded on how they would manipulate the market. One trader was quoted in the chatroom as saying, "If you aint cheating, you aint trying." A newcomer to the price-fixing scheme was warned, "Mess this up and sleep with one eye open".

Katz has agreed to be barred from the banking industry and will cooperate with the continuing investigation. I'm guessing that, in return, he will face no jail time. And I also doubt his hefty bonuses from the three firms in the six years in which he was part of this massive fraud have or will be clawed back. He will probably live a comfortable life after this all blows over. Because on Wall Street, crime does pay.