Opinion ID: 6336933
Heading Depth: 2
Heading Rank: 2

Heading: The Alleged Conspiracy to Restrain Trade

Text: Aiyer, along with Christopher Cummins, Jason Katz, and Nicolas Williams (together, the “co-conspirators”), worked as FX traders at different dealer banks where they traded, in varying degrees, Central and Eastern European, Middle Eastern, and African (“CEEMEA”) currencies, such as the Russian ruble (or “RUB”), South African rand (or “ZAR”), and Turkish lira (or “TRY”).4 The banks at which the co-conspirators worked all competed with each other to win FX customers’ trades. 3 Using the Reuters platform, FX traders can input proposed bids and offers, execute trades, observe market trends, and view “the best bid and the best offer in the market.” Gov’t Supp. App’x at 147. 4 In the FX market, other currencies, such as the U.S. dollar (or “USD”) and the euro (or “EUR”) are said to trade “against” these currencies. App’x at 33. 6 At various times spanning from as early as October 2010 to at least July 2013, the co-conspirators agreed not to compete with one another in terms of pricing and also to coordinate in order to affect pricing in the FX market. Katz, who pled guilty pursuant to a cooperation agreement with the government, testified at trial that “the point of not competing with each other, that was kind of an undercurrent that would just be there on a constant basis.” Gov’t Supp. App’x at 157. Communicating through Bloomberg’s instant messaging platform (“Bloomberg chat”), among other means, the co-conspirators dispensed with competing for trades—in both the interbank and more general customer contexts—and, instead, coordinated in relation to the timing and amounts of their bids and offers. As summarized by Cummins, who also pled guilty pursuant to a cooperation agreement with the government, the co-conspirators engaged in, among other things, the following activities in the FX market: There were times, for example, when a client would call up and ask a number of us in the chat room for the same thing all at the same time, so we would convey to the others what we were being asked, as far as what currency and what size, and then indicate what price we were showing to the client, and in that way we could kind of coordinate what we would show and whether or not we wanted to win the trade and kind of denote who might be the winner of the trade but still maintain the look of a competition in the eyes of the client. 7 ... There were [also] times in the course of trading where . . . myself and the other guys in the chat room might have the same interest, meaning I might have an interest to buy dollars as well as someone else in the chat room had an interest to buy dollars against a certain currency or we might have the same interest to sell dollars. So one of us would be the one to place the interest in the market so that it didn’t give the market the appearance that there were a lot of buyers entering the market at one time, because that might push the market against us and we might buy it at higher prices, meaning it would be unfavorable to us. ... [W]e would [also] spoof the market, meaning if someone in the chat needed to buy dollars against a certain currency, I might place offers in the market in order to try to drive the price lower into that person’s hands, . . . in order to help them out or vice versa. If my friend needed to sell dollars, I might go into the market and place buy orders in the hopes of driving the price higher. Gov’t Supp. App’x at 50–51. During the relevant time period, the co-conspirators communicated with each other almost every day, and, over time, various members of the conspiracy participated in numerous FX trading episodes in furtherance of their agreement not to compete. These trading episodes shed light upon several aspects of the conspiracy. 8 First, the co-conspirators’ FX trading activity, as charged in the indictment, revealed their coordinated efforts when competing for customers’ transactions. For instance, on November 4, 2010, Aiyer and Katz coordinated in connection with the prices they offered to a potential customer who was interested in selling Russian rubles. More specifically, when communicating over Bloomberg chat that day, Aiyer and Katz realized that the same customer was asking them for a “usd rub” quote, App’x at 1132, 5 and they thereafter “agreed what bid we were going to show them between the two of us,” Gov’t Supp. App’x at 168–69. Because the customer wanted to sell currency, Aiyer and Katz knew that the customer was seeking the highest offered price. For example, on one occasion, Aiyer informed Katz that he offered the customer a price of “30.99,” so Katz responded that he would “show 30.98” and indicated that “you can have” the transaction. App’x at 1132. Ultimately, the customer accepted Aiyer’s price. Immediately after this trading episode, Katz wrote to Aiyer via Bloomberg chat that “conspiracies are nice,” to which Aiyer replied, “hahaha . . . prolly shudnt puot this on perma chat.” App’x at 1133. 5 Unless otherwise indicated, Bloomberg chat messages quoted herein appear as they do in the record. 9 Second, other episodes of trading activity demonstrated the co-conspirators’ agreement to refrain from competing with each other on the Reuters platform. For example, on September 23, 2011, Aiyer and Cummins both wanted to buy U.S. dollars against Turkish lira. After noticing that Aiyer was “bidding [TRY] at [a price of] 15,” Cummins noted on Bloomberg chat that he was bidding “at [a price of] 10.” Gov’t Supp. App’x at 400. Cummins then wrote that he would “pull”— or cancel—his bids so that he and Aiyer would not “get in front of each other.” Gov’t Supp. App’x at 401. Third, the co-conspirators’ FX trading activity also demonstrated their attempts to affect prices in the market. For example, on January 18, 2012, Aiyer and Cummins both had identical U.S. dollar-South African rand stop-loss orders— specifically, orders to “sell $25 million if the market goes lower to [a price of] 7.95.” 6 Gov’t Supp. App’x at 79–80. After this fact was disclosed on a Bloomberg chat involving Aiyer, Cummins, and Katz, Katz wrote, “why dont we drive [the price] down there and keep some,” Gov’t Supp. App’x at 500, which Cummins 6 A stop-loss order is an order a customer gives to a dealer bank to sell a specific currency if the market price reaches a certain low price. The idea behind such orders is “risk mitigation”—if the market price for the relevant currency continues to fall beyond the stated price in the stop-loss order, the customer is “locking in a loss.” Gov’t Supp. App’x at 127–28. 10 testified meant “if you push it through now, it is likely that the market would bounce back and . . . you could make a profit selling higher if the market bounces higher.” Gov’t Supp. App’x at 81. Aiyer, Cummins, and Katz then “[w]ork[ed] together on the stop-loss,” Gov’t Supp. App’x at 122, and were able to lower the market price, with Aiyer writing on Bloomberg chat, “wow tht went,” Gov’t Supp. App’x at 465. Around two hours later, Aiyer wrote to Cummins and Katz, “salute to first coordinated . . . zar effort,” and Katz responded, “yep . . . many more to come.” Gov’t Supp. App’x at 450.