According to industry experts, levying large fines against big banks that break trade laws is not enough. Firms like Thomson Rowe Partners are creating tools that have a positive impact on the market by offering novice investors peace of mind when investing for the first time.
NEW YORK, July 16, 2015 (Newswire.com) - In a story broken by Bloomberg, five of the world’s largest banks plead guilty to currency-rigging. John Davidson of Melbourne’s Thomson Rowe Partners explains “A number of big banks have had a hand in market rigging for years now. This behavior dramatically affects everyday people looking to get involved in the stock market.”
Those five banks, along with another, will ultimately be forced to pay out $5.8 Billion in fines. Among those named were many of the world’s biggest foreign-exchange traders including JPMorgan Chase & Co., Royal Bank of Scotland, Citicorp, and Barclays Plc.
"A number of big banks have had a hand in market rigging for years now. This behavior dramatically affects everyday people looking to get involved in the stock market."
John Davidson, Financial Analyst
They’ve been charged with conspiring to manipulate U.S. dollar and euro prices. By allowing some traders, who called themselves ‘The Cartel’, to use online chat rooms to discuss platforms and positions before rates were ever determined, they were able to suppress market competition and give themselves an incredible (and illegal) money making advantage.
According to U.S. Attorney General, Loretta Lynch, “The Department of Justice intends to vigorously prosecute all those who tilt the economic system in their favor, who subvert our marketplaces, and who enrich themselves at the expense of American consumers.”
While the Department of Justice is cracking down on those that rig the markets, small investors have reason to be skeptical that any long-term changes will take hold. This isn’t the first time these banks have been in legal trouble after all.
As recently as 2014, JPMorgan paid out $1.7 billion in what was the largest bank forfeiture in history after facing charges of violating the Bank Secrecy Act and also admitting to not having anti-money laundering compliance procedures. Just two years earlier, HSBC also faced money-laundering charges and were forced to pay $1.92 Billion.
Investing in the stock market can be a daunting task for people who manage portfolios below six figures, especially in the fluctuating world economy in our most recent years. These investors make up a considerable percentage of the total market share and are a vital part of a healthy, stabilized system.
With the continuous cycle of illegal trading practices being unbroken in the past, do consumers have reason to believe the future tells a different story? Small investment firms like Thomson Rowe Partners are working to provide solutions that empower individuals.
“The majority of our new business was based on showing clients how to start managing their funds directly. As the years progressed, we found ourselves often battling with negative press generated by corporate wrongdoing in the marketplace. This was the inspiration for us to incorporate technology to create systems where clients could manage investments in a more DIY friendly capacity, at the same time as utilising the experience of international trade professionals. The paradigm shift has seen a significant increase in new clients and a more secure attitude in general for small investors” – remarks John Davidson.
A move toward user-friendly technology that assists DIY investors to buy and sell in small parcels with the flexibility to move in and out of the market based on technical advice has proved to have a positive effect for Thomson Rowe Partners. But will the success of one modest sized firm from Australia ever be able to combat the political corruption of major corporations?
Levying large fines against big banks and forcing them to terminate employees currently engaged in the illegal currency trading is only a remedy to a symptom of a more systematic disease. According to Phillip Phan, a professor at the John Hopkins Carey Business School, “This is a very calculated move to get the Justice Department off their backs, because otherwise this could go on for years. In a way, there’s anonymity in the crowd – you don’t know who’s more guilty than others.”
“With big banks allowing staff to pass on tips to favored clients, first time traders have welcomed the use of user friendly trading technology. Our tools have given investors the ability to trade their own portfolios without fear of what’s really going on at the point of exchange.”
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