Citi seeks to rebuff former FX Cartel trader allegations
The lawsuit brought by Rohan Ramchandani, Citi’s former head of EMEA G10 Spot FX trading in London, against Citigroup Inc., Citicorp, and Citibank, N.A. continues at the New York Southern District Court.
Ramchandani, who was acquitted of charges relating to manipulation of Forex rates in 2018, is accusing Citi of using him as a scapegoat in order to avoid its responsibility. In February 2021, the Court sided with the “FX Cartel” trader and nixed the Citi attempt to dismiss the lawsuit brought by Ramchandani. Now, Citi has to respond to Ramchandani’s complaint.
In its response filed with the Court on April 23, 2021, Citi denies each and every allegation in the Ramchandani’s Complaint.
Let’s recall that, in January 2017, the United States Department of Justice (DOJ) obtained a grand jury indictment of Ramchandani and two other traders employed at multiple banks including JP Morgan, Barclays, and the Royal Bank of Scotland. The indictment charged the three traders with participating in a conspiracy to suppress and eliminate competition for the purchase and sale of the Euro/U.S. Dollar currency pair in violation of Section 1 of the Sherman Act (15 U.S.C. § 1).
The DOJ’s investigation of the banks and their traders began in 2013 amid press reports on potential manipulation in the FX market in chatrooms that were sometimes referred to as the “Cartel,” the “Bandits Club,” the “Dream Team,” and the “Mafia” and involved an antitrust leniency applicant, UBS, that represented to the DOJ that the Traders entered into a conspiracy to engage in anti-competitive conduct.
The DOJ conducted a four-year investigation of the FX market, that included the cooperation of a member of the traders’ chatroom who worked at UBS, the DOJ’s analysis of trading records, expert analysis of trading data, as well as the traders’ chatroom communications.
Based upon the evidence collected by the DOJ, including from UBS and its cooperating trader, and Ramchandani’s participation in the chatrooms at issue, Citi pleaded guilty to one count of a conspiracy to violate the Sherman Act, which included Citi paying a fine of $925 million. Each of the other banks that employed a trader—JPMorgan, the Royal Bank of Scotland, and Barclays—similarly pleaded guilty to conspiring to violate the Sherman Act.
After obtaining the indictment of the traders, the DOJ prosecuted and tried Ramchandani and the two other traders before a jury in the Southern District of New York in October 2018. The Traders were each acquitted.
Ramchandani has brought an action, alleging that the DOJ prosecution resulted not from his own conduct, but from Citi’s initiation of his prosecution, based on alleged unspecified “fabricated” evidence it provided to the DOJ.
According to Citi, Ramchandani’s conclusory allegations are without merit.
First, Citi claims it was not the complaining witness against Ramchandani. The DOJ’s scrutiny of alleged FX market manipulation began in 2013 when UBS sought leniency under DOJ guidelines by self-disclosing “evidence of potential collusion” involving numerous other banks in the U.S., UK, Europe and elsewhere.
As publicly reported, UBS provided scores of significant in-person or telephonic meetings, and synthesized factual information for the DOJ. In the DOJ’s own words, the information provided by UBS “led to prosecutions of several other financial institutions” with respect to FX market manipulation.
Second, Citi claims it did not fabricate evidence against Ramchandani. The defendants argue the Complaint fails to specify what information was allegedly fabricated or by whom. As part of Citi’s cooperation with the DOJ, Citi, through its outside law firm, including a former acting United States Attorney for the Southern District of New York, and former acting Chief of the Criminal Division and Chief of the Complex Frauds Unit of that office, truthfully relayed information to the DOJ for the DOJ to decide what, if any action, to take.
Third, Citi says that it did not act with malice against Ramchandani when it agreed to cooperate with the DOJ. By January 2014, Citi concluded that Ramchandani’s participation in the chatrooms violated Citi policy and thus terminated him for “gross misconduct.” Indeed, Ramchandani has already litigated and lost his claim that he engaged in no wrongdoing and that Citi “fired Ramchandani without cause.”
In short, the criminal case against Ramchandani resulted from the DOJ’s own determination of wrongdoing concerning the traders, and the grand jury’s determination of probable cause to believe Ramchandani and his fellow traders had committed a crime, Citi says.
According to Citi, Ramchandani’s claim for malicious prosecution based on the allegation that Citi “fabricated” a case against him lacks any legal or factual basis.