Antoine Gara, 20 May 2015
U.S. banking giants Citigroup and JPMorgan Chase and U.K.-base conglomerates Barclays and The Royal Bank of Scotland have agreed to plead guilty antitrust violations stemming from their collusion to manipulate prices in the foreign exchange market over the course of five years, the Department of Justice said on Wednesday. Those banks and UBS have agreed to pay a total of $5.8 billion in fines to global regulators as part of their FX market collusion.
Five banks will pay the Department of Justice nearly $3 billion in fines and penalties for their manipulation of U.S. dollar and Euro exchange rates, which the DoJ characterized as occurring “almost every day for five years” through private chat rooms, benefiting their trading positions but harming countless consumers and investors around the world. Separately, the Federal Reserve said on Wednesday, six banks would pay a total of $1.8 billion in fines for “unsafe and unsound practices” in the FX market.
In the U.S., Citigroup was fined the most: $925 million by the DoJ for its violation of the Sherman Antitrust Act and $342 million by the Fed. JPMorgan was fined a total of $892 million.
Starting in 2007, traders at banks involved in Wednesday’s settlement formed what they called “The Cartel” to fix daily foreign exchange crosses in currencies as prominent as the dollar and euro so that they’d be able to tilt currency movements in their favor. Using coded language and group instant message chats on their Bloomberg Terminals, the traders and their colleagues worked to influence daily rate settings in the forex market by either bidding up some currencies or withholding markets in others at the close of business.