New York Opens Probe Into Currency Manipulation

The New York Attorney General has opened an investigation into​ possible manipulation of options contracts tied to currencies of developing nations, according to a person familiar with the matter.

The regulator filed subpoenas last week to four brokers that operate platforms for trading the contracts: Tullett Prebon PLC, BGC Partners Inc., GFI Group Inc. and TFS-ICAP Ltd., the person said. The investigation was started after the attorney general's office received a tip and is still at a preliminary stage, the person said.

The inquiries center on the alleged use of large bids or offers by firms to bluff others into buying options contracts at artificially low or high prices, the person said. Options on emerging-markets currencies are traded less than those of major currencies, which make them more responsive to big orders.

Investigators are also probing whether some trading activity was designed to trick other traders into believing a particular contract had more volume than it truly had, the person said.

The office's Criminal Enforcement and Financial Crimes Bureau is leading the investigation. Representatives for the brokers who were sent subpoenas declined to comment.

Spoofing has become a major area of enforcement action in markets for stocks, bonds and futures. Michael Coscia, a New Jersey-based trader, in November was found guilty of criminal fraud charges for spoofing the futures market. He is planning to appeal.

The investigation was reported earlier by Bloomberg News.

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(END) Dow Jones Newswires

November 23, 2015 12:55 ET (17:55 GMT)

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