Several Commerzbank traders were fired after a probe into FX manipulation and a wrongful termination suit has revealed some of the details:
The traders were tasked with buying zloty worth 500 million euros on behalf of Swedish furniture maker IKEA in January 2014. To avoid price spikes that such a relatively large sum can create, traders usually divide the sum into many small amounts that are then handled over various exchange platforms.
The traders planned to carry out that strategy for the bulk of the deal, but they also planned to use about 50-100 million euros, or a sizeable chunk of the total, to ‘massacre’, or move the price to IKEA’s detriment, according to an email conversation and a taped telephone chat, which was quoted in court.
The traders and the IKEA treasurer would then have been able to show they struck a ‘great’ deal on average, Commerzbank’s lawyer said.
The plot was foiled by the compliance department but the fired traders report that it was routine practice. Typical rip-off-the-client Wall Street attitude.
