Five of the world’s largest banks will plead guilty to felony charges and pay fines totaling nearly $5.8 billion following a multi-year investigation into allegations the banks banded together to manipulate global financial markets.
From USA Today:
Five major banks Wednesday agreed to plead guilty to criminal charges and pay more than $5.5 billion in collective penalties to settle charges their traders routinely manipulated the world's foreign-exchange market for their own profit.
The Department of Justice, the Federal Reserve and other U.S. and European authorities and regulators said corporate units of Citicorp(C), JPMorgan Chase (JPM), London-based Barclays(BCS) and Royal Bank of Scotland(RBS) acknowledged their traders rigged foreign exchange prices of U.S. dollars and euros from Dec. 2007 to Jan. 2013.
According to Attorney General Loretta Lynch,
"Starting as early as Dec 2007, currency traders at several multinational banks formed a group dubbed 'The Cartel.' Prices the market sets for currencies influence virtually every sector of every economy in the world. The traders actions inflated the banks' profits while harming countless consumers, investors and institutions around the globe — from pension funds to major corporations, and including the banks' own customers."
The Department of Justice reports that,
"By agreeing not to buy or sell at certain times the traders protected each other's trading positions by withholding supply of or demand for currency and suppressing competition in the FX market."
UBS (UBS) also acknowledged involvement in the rate-rigging. However, the Swiss banking giant received conditional immunity from criminal prosecution because it was the first to report foreign-exchange misconduct to DOJ investigators. UBS agreed to plead guilty to one count of wire fraud, pay a $203 million fine and accept a three-year term of probation for Libor rate manipulation by its traders. UBS also agreed to pay $342 million to the Federal Reserve and make remedial changes to its foreign-exchange business practices.
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