5 big banks pay $5.4 billion for rigging currencies
Virginia Harrison and Mark Thompson, 20 May 2015
Citigroup (C), Barclays (BCS), JP Morgan Chase (JPM), and Royal Bank of Scotland (RBSPF)were fined more than $2.5 billion by the U.S. after pleading guilty to conspiring to manipulate the price of dollars and euros. The four banks, plus UBS (UBS) , have also been fined $1.6 billion by the Federal Reserve, and Barclays will pay regulators another $1.3 billion to settle related claims.
The first four banks operated what they described as “The Cartel” from as early as 2007, using online chatrooms and coded language to influence the twice-daily setting of benchmarks in an effort to increase their profits. The guilty banks “participated in a brazen display of collusion and foreign exchange rate market manipulation,” said U.S. Attorney General Loretta Lynch.
Lynch said bankers conspired to enrich themselves at the expense of “countless consumers, investors and institutions around the world.” She declined to comment on criminal charges against individual bank employees, saying only that the Justice Department’s investigation is ongoing.
The global foreign exchange market is massive yet lightly regulated. Officials said trading in the eurodollar exchange rate market is five times larger than trading on all global stock exchanges combined. The four banks that pleaded guilty accounted for about a quarter of all activity in that market.
The five banks involved in Wednesday’s settlement, plus HSBC (HSBC) and Bank of America (BAC), have now paid about $10 billion in total to authorities in the U.S. and Europe for their part in the foreign exchange scandal.
