- The Washington Times - Tuesday, November 18, 2003

NEW YORK (AP) — Federal law enforcement officers yesterday began arresting Wall Street traders suspected of foreign currency exchange crimes in a crackdown on a largely unregulated financial market, sources said.

Speaking to the Associated Press on the condition of anonymity, two government sources confirmed that raids were aimed at arresting people named in court papers filed under seal in U.S. District Court in Manhattan.

One source said the crimes were committed as investors were cheated by individuals who claimed to be making foreign exchange trades when they were not.

The trades were worth millions of dollars, the sources said.

FBI spokesman Joe Valiquette declined to comment, as did Michael Kulstad, a spokesman for U.S. Attorney James B. Comey.

The crimes could be carried out virtually anywhere because the foreign exchange market is a largely unregulated one, one of the sources said.

At least 10 arrests were made during a raid at a downtown Manhattan office building, although other arrests were expected in other East Coast cities, one source said.

Cable network CNBC reported last night that 47 persons were targeted in the probe.

Mr. Comey is expected to hold a news conference today to announce the charges.

The currency exchange market has no central headquarters. It operates 24 hours a day as a worldwide network of traders, connected by telephones and computers. There are three main centers of currency trading — the United States, Britain and Japan — which handle about 60 percent of all volume, according to the New York Federal Reserve.

In 2001, an estimated $1.2 trillion was traded daily, with banks conducting most of the trades. Currency brokers also play a role, acting as intermediaries between banks.

There is no regulatory body establishing trading rules, and no clearinghouse between traders as there is in other organized markets.


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