Four major banks agreed to plead guilty to trying to manipulate foreign exchange rates and six were fined nearly $6 billion in another settlement in a global probe into the London interbank offered rate (Libor).
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Authorities in the United States and Britain accused traders at Citigroup, JP Morgan, Barclays, UBS, and Royal Bank of Scotland (RBS) of cheating their clients to boost their own profits using invitation-only chatrooms and coded language to coordinate their trades.
The misconduct occurred up until 2013, after regulators had started punishing banks for rigging the London interbank offered rate (Libor), an interest rate benchmark, and banks had pledged to overhaul their corporate culture and bolster compliance.
In total, authorities, after the probe in the $5-trillion-a-day market, in the United States and Europe have fined seven banks over $10 billion for failing to stop their dealers from trying to manipulate foreign exchange rates used every day by millions of people from trillion dollar investment houses to tourists buying foreign currencies for their holidays.
This settlement stands out because Citigroup, JP Morgan, Barclays and Royal Bank of Scotland pleaded guilty and for the size of the penalties, including a $2.5 billion fine by the Department of Justice, the largest set of antitrust fines ever obtained in its history.
"The penalty all these banks will now pay is fitting considering the long-running and egregious nature of their anticompetitive conduct," said Attorney General Loretta Lynch at a news conference in Washington.
Barclays was fined a record $2.4 billion, underscoring how widespread the misconduct was. Barclays had set aside $3.2 billion to cover any forex-related settlement.
UBS, which avoided a guilty plea over the forex debacle, pleaded guilty instead to one count of wire fraud and will pay a $203 million fine for its role in rigging Libor after its involvement in the forex scandal breached an earlier DOJ agreement. It also had to pay $342 million to the Federal Reserve over attempted manipulation of forex rates.
The U.S. central bank fined six banks for unsafe and unsound practices in the foreign exchange markets, including a $205 million fine for Bank of America, which also avoided a guilty plea. ■