By Chiara Albanese
Bank of New York Mellon Corp. has fired a London-based currency
trader after the bank found that his electronic communications
breached its compliance rules, according to a person familiar with
the matter.
The dismissal is the first of its kind from this bank, or from
any chiefly custody-focused bank, since the global regulatory
investigation into currencies-trading practices started early last
year, a sign that behavior is under scrutiny beyond the group of
top dealing banks that agreed to pay $4.3 billion in fines on both
sides of the Atlantic earlier this month.
Jon Smailes, senior trader on the London spot desk of the bank,
was ousted in recent months following a period of leave, based on
the findings of an internal review initiated by BNY Mellon around
the time that regulators started digging into the market last year,
according to the person. His departure hasn't been previously
reported. Mr. Smailes, who had been at the bank for more than 10
years, couldn't be reached for comment. The nature of his
communications and what rules he is said to have broken are
unclear.
The bank informed U.K. regulator the Financial Conduct Authority
of its findings and of Mr. Smailes's dismissal, the person familiar
with the matter said. The bank isn't under investigation in the
U.K.
New York-headquartered BNY Mellon is a relatively small player
in the $5.3 trillion-a-day currencies market, and the bulk of its
foreign-exchange business stems from its activities in custody, the
safekeeping of assets for clients such as pension funds. The bank
has about $28.3 trillion of assets under custody or administration,
according to its website.
The bank wasn't one of those fined earlier this month for their
failure properly to supervise traders. Citigroup Inc., J.P. Morgan
Chase & Co., Royal Bank of Scotland Group PLC, HSBC Holdings
PLC, Bank of America Corp. and UBS AG reached settlements with a
combination of regulators in the U.K., U.S. and Switzerland.
Regulators said those banks failed to stop employees from
improperly sharing confidential information with rival banks or
from improperly attempting to boost currencies-trading profits at
their customers' expense. The banks didn't dispute the regulators'
findings.
The Nov. 12 settlement hasn't proven to be the end of the
matter. Tuesday, The Wall Street Journal reported that the U.S.
Justice Department is investigating allegations that an employee of
HSBC leaked confidential client information to a major hedge
fund.
Last week, Goldman Sachs Group Inc., another firm that wasn't
part of regulatory settlements earlier this month, also fired a
currencies trader who had previously held a role at HSBC.
Following the settlement, RBS Chief Executive Ross McEwan said
his bank will continue its internal investigation of its
foreign-exchange business. At the time, he said RBS is examining
disciplinary and accountability processes for more than 50 traders
and employees. "Those who have been found lacking in conduct or
accountability terms will be dealt with appropriately, including
through clawback, award forfeiture, or through formal disciplinary
procedures," he said.
All told, about a dozen banks have so far suspended or fired
more than 30 traders and other employees in connection with the
foreign-exchange probes.
Write to Chiara Albanese at chiara.albanese@wsj.com
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