The Justice Department has begun an examination of trading in the U.S. Treasury market, following the outlines of its successful cases against Wall Street’s illegal practices in foreign currencies and other businesses, said three people familiar with the inquiry.
The government is also continuing to look into possible collusion in gold and silver markets and in trading around certain oil benchmarks, the people said.
Though the latest inquiry into Treasury trading is in its earliest stages, investigators are said to be probing whether information is being shared improperly by financial institutions. Some of the world’s biggest banks and their subsidiaries pleaded guilty after traders were shown to be using chat rooms, which functioned as cartels, to coordinate positions on foreign-exchange markets. These practices violated federal antitrust laws. Some of the same banks were among those that settled fraud and antitrust investigations into manipulating key interest rates.
After the most recent flurry of guilty pleas — from firms including JPMorgan Chase & Co., Citigroup Inc., Royal Bank of Scotland Group Plc, Barclays Plc, Deutsche Bank AG and UBS Group AG — banks are in no position to be anything other than cooperative with investigators.
Wall Street’s collective sigh of relief at wrapping up those long-running investigations could be quickly replaced by concern about the possibility of even stiffer penalties if errant behavior surfaces in more markets. Prosecutors have expressed frustration over the difficulty of changing the culture at financial institutions.
“At this point, whatever the facts are regarding this, the government is in a strong position thinking that where there’s smoke, there’s fire,” said Jill Fisch, a professor at University of Pennsylvania Law School. “It’s not just one investigation after another, it’s one scandal after another.”
Peter Carr, a Justice Department spokesman, declined to comment. The New York Post reported June 8 that prosecutors are turning their attention to the U.S. Treasury market.
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