Royal Bank of Scotland Group Plc (RBS), UBS AG (UBS), (HSBC), Bank of America Corp (BAC), HSBC Holdings Plc, JPMorgan Chase & Co. (JPM), and Citigroup Inc. (C) will pay $4.3 billion in penalties to regulators in the United States and Europe for failing to stop traders from attempting to manipulate the foreign exchange market. Further penalties could also result not just for the banks but also for certain individuals in the wake of litigation accusing bank dealers of colluding amongst themselves to rig benchmarks that are used in determining foreign currency.
According to authorities, the dealers exchange confidential data regarding client orders and worked it out so their trades would enhance profits. This information was purportedly exchanged in online chat rooms. Regulators say the misconduct occurred from 2008 through October 2013. The probe has also widened to look into whether traders used confidential information to take bets on unauthorized personal accounts and if clients were charged excessive commissions by sales desks.
The currency rigging probe has led to the firing or suspension of over 30 traders while the number of automated trade transactions have increased. In the U.S. the Federal Reserve, the Justice Department, and New York’s financial regulator continue to investigate banks over foreign exchange trading. Meantime, some lawyers have spoke out about how the settlement doesn’t address client compensation.
The regulators involved in the currency rigging probe included The U.S. Commodity Futures Trading Commission, The U.S. Office of the Comptroller of the Currency, Switzerland’s Financial Market Supervisory Authority, and Britain’s Financial Conduct Authority. Here is a breakdown of the fines:
FCA is fining:
UBS $371 million
Citibank $358 million
RBS $344 million
JPMorgan $352 million
HSBC $343 million
CFTC is fining:
Citibank $310 million
HSBC $275 million
JPMorgan $310 million
UBS $290 million
RBS $290 million
The Office of the Comptroller of the Currency assessed JPMorgan, Citigroup, and Bank of America $950 million for their practices related to forex trading. Barclays Plc (BARC) which pulled out of talks resulting in these latest settlements, is looking to arrive at a more “coordinated settlement.”
Contact The SSEK Partners Group to speak with one of our securities lawyers if you suspect you were the victim of financial fraud.
Regulators fine global banks $4.3 billion in currency investigation, Reuters, November 12, 2014
JPMorgan, Citi Among Five Banks In $3.3 Billion Forex Settlement, Forbes, November 12, 2014
Six Banks to Pay $4.3 Billion in First Wave of Currency-Rigging Penalties, Bloomberg, November 12, 2014
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Two Former Merrill Lynch Brokers Contend with Unauthorized Trading Claims, Stockbroker Fraud Blog, November 10, 2014
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