Sunday Times 2
US, Britain fine six top banks nearly $6 bn for forex, Libor abuses
View(s):NEW YORK (AFP) – US and British regulators fined six major global banks a total of nearly $6 billion between them for rigging the foreign exchange market and Libor interest rates.
They said forex traders from the banks had met in online chatroom groups, one brazenly named “the Cartel” and another “Mafia,” to set rates that cheated customers while adding to their own profits.
“If you aint cheating, you aint trying,” a Barclays Bank employee said in one message on how to mark up prices to clients.
In the far-flung settlement, Barclays, JPMorgan Chase, Citicorp and the Royal Bank of Scotland all pleaded guilty to US Justice Department charges of conspiring to manipulate the massive currency market.
Switzerland’s UBS meanwhile pleaded guilty to violating a prior settlement of charges for rigging the Libor interest rate.
And Bank of America was included with the other five in fines levied by the US Federal Reserve in the forex rigging case.
“They acted as partners — rather than competitors — in an effort to push the exchange rate in directions favourable to their banks but detrimental to many others,” said US Attorney General Loretta Lynch.
The decision to demand guilty pleas shows “the Justice Department has become far more serious in its criminal prosecutions than it has in the past,” said Harry First, a professor at New York University School of Law and a former antitrust regulator.
But the department should prosecute individuals if it wants to show it is “really serious about deterrence,” First said.
‘The Cartel’
In Wednesday’s settlement, the Department of Justice meted out its largest set of antitrust fines ever, assessing $2.5 billion against Barclays, JPMorgan, Citicorp and RBS in the forex case.
Those four, plus UBS and Bank of America, will also pay more than $1.8 billion to the US Federal Reserve over “unsafe and unsound practices” in forex markets.
Barclays, which did not take part in a previous settlement last November with various agencies, was additionally fined more than $1.3 billion by Britain’s Financial Conduct Authority, the New York State Department of Financial Services, and the US Commodity Futures Trading Commission.
Combined with a $203 million Justice Department fine for UBS in the Libor case, and other penalties, the total assessed Wednesday was almost $6 billion.
Regulators described a bold scheme by bank traders to orchestrate the $5.3-trillion-per-day global foreign exchange market.
They communicated almost daily in code in exclusive chatrooms, like “The Cartel,” fixing exchange rates and setting trades to benefit one another.
They discussed how to gouge clients without alienating them completely.
And they limited participation in their groups to protect their activities.