Recommended reading: Calandra, Hathaway, Sinclair, Murphy


By Daniel Bases

NEW YORK, Nov. 19 (Reuters) -- The U.S. Justice
Department said on Wednesday it charged 47 people,
including employees of J.P. Morgan Chase and UBS,
with fraud and other criminal offenses in the
foreign exchange market after a slew of arrests
the previous evening in three states.

"Today's charges run the gamut of fraud. With more
than 1,000 victims from small investors to large
banks, the losses are in the millions," U.S.
Attorney James Comey said at a news conference
in lower Manhattan.

Defendants in the sting called "Operation Wooden
Nickel" include employees of JP Morgan Chase,
Societe Generale, UBS, Dresdner Kleinwort Benson,
Israel Discount Bank, a former member of the
Federal Reserve's private-sector forex committee,
three practicing attorneys, and numerous officers
of various publicly traded companies, the Justice
Department said. The Fed forex committee is an ad
hoc group of financial industry professionals that
sets "best practice" policies, but is not formally
connected to the Fed.

"Among the principal charges announced today are
those contained in a criminal complaint charging
20 defendants with allegedly participating in a
rigged forex scheme that has pervaded the forex
markets for some 20 years," the Justice Department

Individuals at the banks were charged, but the
banks themselves were not accused. Arrests were
made in the World Financial Center in lower
Manhattan, Jersey City, New Jersey, and Stamford,
Connecticut. Agents of the Federal Bureau of
Investigation hauled out well-dressed men in
handcuffs from various locations in the late
afternoon raid.

The banks were informed a few days ago in order
to protect the undercover agent, the U.S. attorney

"In just a few months, the undercover investigation
revealed approximately 123 rigged trades, totaling
in excess of $650,000 and cash payoffs to the
currency traders totaling hundreds of thousands of
dollars," the Justice Department said.

In a separate investigation, the Commodity Futures
Trading Commission and the Securities and Exchange
Commission filed charges including commodities
fraud charges against several currency trading

The SEC filed a civil action charging United
Currency Group Inc. and its Chief Executive Officer
Adam Swickle with securities fraud. The SEC said
Swickle is charged with raising over $700,000 from
21 investors by selling worthless stock in his
purported currency trading firm, United Currency

A number of the firms could not be reached for

UBS spokeswoman Christine Walton said, "This
matter involves a single individual at UBS working
in the foreign exchange area in Stamford, Conn.
There is no suggestion that any of UBS' businesses
are being investigated in connection with this
matter and UBS currently has no evidence of any
material financial impact to the firm."

A JP Morgan Chase official in New York said, "It
was just one person and it had no financial impact
on the firm."

On Wednesday, an ICAP spokesman declined to
comment, referring Reuters to an earlier statement
in which the firm distanced itself from the probe
and said there was no suggestion any of its
businesses were the subject of FBI inquiries.

The Justice Department said in the statement, "The
criminal charges announced today allege fraud and
other criminal offenses by key players at virtually
every level of the foreign currency markets,
including by operators of foreign currency 'boiler
rooms' -- which tend to be small operations where
financial professionals often make cold phone calls
to unsuspecting investors."

While the $1.2 trillion-a-day foreign exchange market
has no government regulator, large financial
institutions have in recent years stepped up
compliance requirements for their traders.

The sting operation's arrests came at a time when
the U.S. financial markets have been hit by scandal
after scandal. Corporate wrongdoing by companies like
Enron Corp., which went bankrupt in December 2001,
sparked a massive accounting scandal and led to the
demise of Andersen, one of the world's largest
accounting firms. The scandal rocked investor
confidence and unearthed irregularities at other