U.S. Attorney James Comey, speaking at a press conference on Wednesday, said losses related to the alleged illegal foreign currency trades, "were in the millions."

Federal authorities announced charges Wednesday against 47 people in a broad crackdown on fraud in the foreign currency exchange market that officials said bilked millions from big-name banks and small investors alike.

Most of the bankers, stockbrokers and traders were picked up in raids late Tuesday and early Wednesday in what law-enforcement officials called their most sweeping infiltration ever into the foreign currency markets.

The principal charges accused currency traders at some banks of making rigged trades designed to lose money — then taking cash kickbacks from co-conspirators who made money on the deals.

An undercover FBI agent discovered 123 rigged trades totaling $650,000 in just a few months, authorities said — but they cautioned similar fraud has likely been carried out for decades in the decentralized, loosely regulated foreign currency market.

Currency traders at J.P. Morgan Chase and UBS Warburg, two of the nation’s most prominent investment banks, were among those arrested.

Also arrested, officials said, were operators of so-called “boiler rooms” who persuaded individual investors to give them money for what they portrayed as sound currency investments — then simply stole the cash.

More than 1,000 individual investors were cheated out of tens of millions of dollars when they were talked into putting their money into operations with “fancy-sounding names,” Manhattan U.S. Attorney James Comey told reporters.

“There are a lot of sharks in that water,” Comey said. “We in law enforcement suggest careful reflection from the beach before you jump in.”

Authorities stressed that while the alleged fraud was widespread, it constitutes only a fraction of the trillion-dollar-a-day foreign currency market. They said no banks were implicated in the fraud.

The currency exchange market has no central headquarters, instead operating 24 hours a day as a worldwide network of traders, connected by telephones and computers. 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.

The charges announced Wednesday resulted from an 18-month investigation that spread to six states: New York, New Jersey, Connecticut, Florida, Tennessee and Colorado.

Charges filed against the 47 defendants included bank fraud, mail fraud, wire fraud, securities fraud and money laundering. There was no immediate word on when they would appear in court.

Federal authorities said 40 of the 47 were arrested late Tuesday and early Wednesday, two were previously arrested and the remainder were expected to be arrested later.

Among those arrested was Stephen E. Moore, who formerly served on the foreign exchange committee of the Federal Reserve Bank, prosecutors said. An attorney for Moore could not immediately be reached.

In one raid, several people were arrested at lower Manhattan’s World Financial Center as they gathered for drinks before taking a planned gambling trip to Atlantic City, N.J., authorities said.

Several of the traders told the undercover FBI agent they had “no fear” because they believed law enforcement would never get close enough to stop them, said Pasquale D’Amuro, director of the FBI’s New York office.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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