NatWest Markets Plc, a London-based global banking and financial services firm with offices in Stamford, has pleaded guilty one count of wire fraud and one count of securities fraud in the markets for U.S. Treasury securities and futures contracts.
NatWest will pay approximately $35 million in a criminal fine, restitution and forfeiture, and will serve three years of probation and will agree to the imposition of an independent compliance monitor.
According to court documents and the company’s admissions, NatWest traders in London and Stamford independently engaged in schemes to defraud in connection with the purchase and sale of U.S. Treasury futures contracts between January 2008 and May 2014. In each scheme, NatWest traders engaged in “spoofing” by placing orders with the intent to cancel those orders before execution, attempting to profit by deceiving other market participants by injecting false and misleading information regarding the existence of genuine supply and demand in the market. The spoof orders were designed to artificially push up or down the prevailing market price so that the NatWest traders could trade more profitably as a result of these schemes.
In 2018, two other traders employed at NatWest”™s Singapore branch engaged in a fraud scheme in connection with the purchase and sale of U.S. Treasury securities in the secondary market.
The 2018 securities fraud scheme constituted a material breach of the Oct. 25, 2017, Non-Prosecution Agreement between the U.S. Attorney”™s Office for the District of Connecticut and NatWest”™s U.S. broker-dealer subsidiary, NatWest Markets Securities Inc. (formerly RBS Securities Inc.), and occurred while NatWest (formerly The Royal Bank of Scotland Plc) was on probation following its May 20, 2015 guilty plea and Jan. 5, 2017 sentencing for conspiring to manipulate the foreign currency exchange market.
“As we have previously warned, there will be serious consequences for a company that breaches the terms of an agreement with the government. Today”™s guilty plea by NatWest and the associated penalty show exactly that,” said Deputy Attorney General Lisa O. Monaco.
