US Prosecutors May Revoke Currency Rigging Settlements

According to Bloomberg.com, U.S. prosecutors are thinking about revoking settlements in currency manipulation settlements that were agreed upon years ago and going after banks for manipulating interest rates. The Department of Justice is looking at whether banks violated the earlier deals that resolved those investigations, which stipulated that they would not break the law. If the government finds that banks did in fact commit crimes after the earlier settlements were reached it would be able to revoke those deals.

It has been a common practice for the DOJ to offer deferred prosecution and non-prosecution settlements in probes involving a number of matters, including market manipulation and violations of sanctions. Banks admit responsibility while cooperating with the investigation.

To rescind such a deal would be unprecedented. Among the banks that have settled probes over London interbank offered rate, also known as Libor, are Royal Bank of Scotland Group Plc (RBS), Barclays Plc (BARC), and UBS Group AG (UBS).

The DOJ has continued to look into alleged currency benchmark manipulation and may be seeking guilty pleas from some banks, in addition to imposing penalties. Some guilty pleas would be related to traders from the different banks that worked together to fix currency benchmarks. There is also the probe into whether banks deceived clients about currency transaction prices, a source told Bloomberg. The government is currently working on arriving at deals with Barclays, JPMorgan Chase & Co. (JPM), Citigroup (C), UBS, and RBS.

According to The Wall Street Journal, Barclays and Citigroup are expected to soon settle a currency-rigging lawsuit by institutional investors who contend that the banks manipulated forex-rates. Sources tell the newspaper that they could pay up to $800 million total. Among the plaintiffs are investment funds and pension funds.

J.P. Morgan and UBS have already settled their part in the same case. UBS resolved the allegations for $135 million, while JPMorgan settled for $99.5 million. The two banks consented to cooperate and promised to give the investors’ securities lawyers any information they needed to go after the other banks.

U.S. May Revoke Settlement Agreements in Currency-Rigging Probes, Bloomberg, March 17, 2015

Citigroup, Barclays Close to Settling Forex Lawsuit With Private Investors, The Wall Street Journal, March 17, 2015

Swiss Bank UBS Settles Currency-Rigging Claims for $135M, ABC News, Mrach 13, 2015

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