US and British regulators fined six major global banks a total of nearly $6 billion between them Wednesday for rigging the foreign exchange market and Libor interest rates.
They said forex traders from the banks had met in an online chatroom brazenly named “the Cartel” to set rates that cheated customers while adding to their own profits in the massive global currencies market.
In the far-flung settlement, Barclays Bank, JPMorgan Chase, Citicorp and the Royal Bank of Scotland all pleaded guilty to US Justice Department charges of conspiring to manipulate the massive currency market.
Switzerland’s UBS meanwhile pleaded guilty to violating a prior settlement of charges for rigging the Libor interest rate. And Bank of America was included with the other five in fines levied by the US Federal Reserve in the forex rigging case.
“They acted as partners — rather than competitors — in an effort to push the exchange rate in directions favourable to their banks but detrimental to many others,” said US Attorney General Loretta Lynch.
“And their actions inflated the banks’ profits while harming countless consumers, investors and institutions around the globe.”
‘THE CARTEL’: In Wednesday’s settlement, the Department of Justice meted out its largest set of antitrust fines ever, assessing $2.5bn against Barclays, JPMorgan, Citicorp and RBS in the forex case.
Those four, plus UBS and Bank of America, will also pay more than $1.8bn to the US Federal Reserve over “unsafe and unsound practices” in forex markets.
Barclays, which did not take part in a previous settlement last November with various agencies, was additionally fined more than $1.3bn by Britain’s Financial Conduct Authority, the New York State Department of Financial Services, and the US Commodity Futures Trading Commission.
Combined with a $203bn Justice Department fine for UBS in the Libor case, and other penalties, the total assessed Wednesday was almost $6bn.
Regulators described a bold scheme by financial heavyweights to orchestrate trades in the $5.3-trillion-per-day global foreign exchange market.
BARCLAYS FINED $2.4BN: The size of penalties on individual banks ranged from the hundreds of millions of dollars to $2.4bn for British bank Barclays, depending on a bank’s involvement in the scheme.
The Barclays sum was high because it had not participated in the November settlement between several banks and the FCA, DFS and CFTC.
Citigroup, which had the second largest total fine of $1.3bn, called the scandal “an embarrassment to our firm, and stands in stark contrast to Citi’s values.”
