Global banks admit guilt in forex probe, fined nearly $6 billion

Wed May 20, 2015 6:28pm EDT
 
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By Karen Freifeld, David Henry and Steve Slater

NEW YORK/LONDON (Reuters) - Four major banks pleaded guilty on Wednesday to trying to manipulate foreign exchange rates and, with two others, were fined nearly $6 billion in another settlement in a global probe into the $5 trillion-a-day market.

Citigroup Inc (C.N: Quote), JPMorgan Chase & Co (JPM.N: Quote), Barclays Plc (BARC.L: Quote), UBS AG UBSG.VX(UBS.N: Quote) and Royal Bank of Scotland Plc (RBS.L: Quote) were accused by U.S. and UK officials of brazenly cheating clients to boost their own profits using invitation-only chat rooms and coded language to coordinate their trades.

All but UBS pleaded guilty to conspiring to manipulate the price of U.S. dollars and euros exchanged in the FX spot market. UBS pleaded guilty to a different charge. Bank of America Corp (BAC.N: Quote) was fined but avoided a guilty plea over the actions of its traders in chatrooms.

"The penalty all these banks will now pay is fitting, considering the long-running and egregious nature of their anticompetitive conduct," said U.S. Attorney General Loretta Lynch at a news conference in Washington.

The misconduct occurred until 2013, after regulators started punishing banks for rigging the London interbank offered rate (Libor), a global benchmark, and banks had pledged to overhaul their corporate culture and bolster compliance.

In total, authorities in the United States and Europe have fined seven banks over $10 billion for failing to stop traders from trying to manipulate foreign exchange rates, which are used daily by millions of people from trillion-dollar investment houses to tourists buying foreign currencies on vacation.

The investigations are far from over. Prosecutors could bring cases against individuals, using the banks' cooperation pledged as part of their agreements. Probes by federal and state authorities are ongoing over how banks used electronic forex trading to favor their own interests at the expense of clients.

The settlements on Wednesday stood out in part because the U.S. Department of Justice forced Citigroup's main banking unit Citicorp, and the parents of JPMorgan, Barclays and Royal Bank of Scotland to plead guilty to U.S. criminal charges.   Continued...

 
A file picture shows the waning moon behind a logo of Swiss bank UBS in Zurich, Switzerland February 10, 2015. REUTERS/Arnd Wiegmann/Files