AMERICAN EXPRESS PLAYING WITH FX. FBI Investigating AmEx – By Todd Horwitz, Bubba Trading

 

The Federal Bureau of Investigation has launched a probe into pricing practices within American Express Co.’s foreign-exchange unit, according to people familiar with the matter. The investigation is in its early stages and is focused on whether the foreign-exchange international payments department misrepresented pricing to clients in order to win their business, the people said.

The FBI began its investigation in August, the people said, after The Wall Street Journal, citing current and former employees, reported that AmEx’s foreign-exchange unit had recruited business clients with offers of low currency-conversion rates before raising prices without warning.

AmEx said in July that it was commissioning a third-party review of its foreign-exchange business and that it would fix any problems uncovered. The FX International Payments unit accounts for less than half of one percentage point of overall revenue, the company said at the time. Debevoise & Plimpton LLP is conducting the review, a person familiar with the matter said Wednesday, asking not to be identified because the information isn’t public.

AmEx started the review after the Journal said some employees had boosted exchange rates for business customers without notifying them. Current and former employees told the newspaper that AmEx’s commissions-driven culture encouraged the practice. Customers were recruited with low initial rates but weren’t informed that those prices were subject to change without notice, according to the Journal. The FBI is waiting for the company to answer a list of questions, the Journal said. Meanwhile, the unit’s employees have been told not to delete emails.

The Office of the Comptroller of the Currency also is examining how AmEx disclosed pricing and potential rate increases to customers, the Journal said, citing a person familiar with that inquiry. Bryan Hubbard, an OCC spokesman, declined to comment.

Keep those stops tight
Todd “Bubba” Horwitz

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About the author

Todd Horwitz - Author of “Average Joe Options“. Todd began his trading career in 1980 at the CBOE. He was one of the original traders in the OEX & helped start the SPX. He is a member the CME where he trades S&P futures as well as foreign currencies & is a regular contributor to CNBC, Bloomberg, BNN, Fox & many other major news networks.