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  1. #1
    Senior Member JohnDoe2's Avatar
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    Aug 2008
    PARADISE (San Diego)

    Six Banks Pay $5.8 Billion, Five Charged in Currency Case

    Six Banks Pay $5.8 Billion, Five Charged in Currency Case

    by David McLaughlinTom SchoenbergLiam Vaughan
    7:00 AM PDT May 20, 2015

    Five Banks Plead Guilty in U.S. Market Rigging Probe

    Six of the world’s biggest banks will pay $5.8 billion and five of them agreed to plead guilty to charges tied to a currency-rigging probe as they seek to wind down almost half a decade of enforcement actions.

    Citicorp, JPMorgan Chase & Co., Barclays Plc and Royal Bank of Scotland Plc agreed to plead guilty to felony charges of conspiring to manipulate the price of U.S. dollars and euros in settlements with the Justice Department announced in Washington Wednesday.

    The main banking unit of UBS Group AG agreed to plead guilty to a wire-fraud charge related to interest-rate manipulation. The Swiss bank, the first to cooperate with antitrust investigators, was granted immunity in the currency probe.

    The four banks that agreed to plead guilty to currency charges are among the world’s biggest foreign-exchange traders. They were accused of colluding to influence benchmark rates by aligning positions and pushing transactions through at the same time. Traders who described themselves as members of “The Cartel” used online chat rooms to discuss their positions before the rates were set and suppress competition in the market, the Justice Department said.

    “Brazen Collusion”

    The scheme was a “brazen display of collusion,” Attorney General Loretta Lynch said in a statement. “This Department of Justice intends to vigorously prosecute all those who tilt the economic system in their favor, who subvert our marketplaces, and who enrich themselves at the expense of American consumers,” she said.

    The accords bring the total fines and penalties paid by the five banks to resolve the currency investigations to about $9 billion, the Justice Department said.

    In the settlement with the Justice Department, Citicorp parent Citigroup Inc. will pay $925 million, the highest of the banks penalized. Barclays agreed to a fine of $650 million. JPMorgan will pay $550 million, and Royal Bank of Scotland Group Plc agreed to a $395 million fine. UBS will pay $203 million.

    Separately, the Federal Reserve imposed fines of more than $1.6 billion on the five banks for “unsafe and unsound practices.”

    London-based Barclays will pay an additional $1.3 billion as part of settlements with the New York Department of Financial Services, the Commodity Futures Trading Commission and the U.K.’s Financial Conduct Authority.

    Read the Forex Settlement Documents:

    Terminate Employees

    As part of its settlement with New York banking superintendent Benjamin Lawsky, Barclays agreed to terminate eight employees engaged in currency trading between London and New York.

    The Fed also fined Bank of America Corp. $205 million for failing to detect and address conduct by traders who discussed the possibility of entering into agreements to manipulate currency prices, according to a statement.

    The penalties represent the first criminal resolutions in a two-year currency probe, which is ongoing, said Andrew McCabe, assistant director in charge of the Federal Bureau of Investigation’s Washington Field Office.

    Other firms, including Deutsche Bank AG and HSBC Holdings Plc are still under investigation. Cases against individual traders also may be forthcoming, people with knowledge of the probe have said.

    “Calculated Move”

    The settlements show the eagerness of bank executives to end one of the last big legal cases dogging the industry. Scandals involving the aggressive sale of mortgage bonds and interest-rate rigging helped reinforce the view that some firms are too big to manage properly and should be broken up.

    “This is a very calculated move to get the Justice Department off their backs, because otherwise this could go on for years,” said Phillip Phan, a professor at the Johns Hopkins Carey Business School. “In a way, there’s anonymity in the crowd -- you don’t know who’s more guilty than others.”

    Although UBS wasn’t charged for currency manipulation, the government said the Swiss bank engaged in deceptive currency trading and sales practices after it settled a previous investigation in the manipulation of the London interbank offered rate in 2012. The conduct violated the non-prosection agreement with the Justice Department.

    UBS Markups

    UBS traders and sales staff misrepresented to customers on certain transactions that markups were not being added, when in fact they were, using hand signals to conceal the markups, the Justice Department said in its statement. A UBS trader also conspired with other banks acting as dealers in the spot market by agreeing to restrain competition in the purchase and sale of dollars and euros, the government said. UBS’s collusive conduct occurred from October 2011 to at least January 2013.

    Bank executives expressed embarrassment and frustration over the conduct, pointed a finger at a few bad apples and vowed to do better.

    “The conduct of a small number of employees was unacceptable and we have taken appropriate disciplinary actions,” UBS Chief Executive Officer Sergio Ermotti and Chairman Axel Weber said in a statement.

    JPMorgan said in a statement that the conduct underlying the antitrust charge against the bank is “principally attributable” to a single trader, who has since been dismissed.

    “The conduct described in the government’s pleadings is a great disappointment to us,” said Chairman and Chief Executive Officer Jamie Dimon. “We demand and expect better of our people. The lesson here is that the conduct of a small group of employees, or of even a single employee, can reflect badly on all of us.”

    Operations Continue

    JPMorgan shares slid 0.2 percent to $66.87 at 10:25 a.m. in New York and Citigroup dropped 0.3 percent. UBS climbed 3.5 percent, RBS rose 2.3 percent, and Barclays advanced 3.2 percent.

    JPMorgan and Citigroup said they don’t anticipate a material impact on operations or their ability to serve clients.

    The Justice Department had been aiming to extract pleas from the banks’ parent companies, people familiar with the talks had said. In its announcement, the department characterized the companies entering pleas as “parent-level.”

    Citicorp, the unit agreeing to plead guilty, is wholly owned by parent Citigroup Inc. Citicorp, in turn, contains the company’s main banking subsidiary, Citibank NA, which held 74 percent of Citigroup’s assets at year-end. Royal Bank of Scotland Plc is a unit of Royal Bank of Scotland Group Plc.

    The guilty pleas by Citicorp and JPMorgan are the first in criminal cases by major U.S. banks since Drexel Burnham Lambert admitted to six counts of mail and securities fraud in 1989. They follow pleas last year by Zurich-based Credit Suisse Group AG for aiding tax evasion and BNP Paribas SA for violating U.S. sanctions, and by Deutsche Bank this year for its role in manipulating interest rates.


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  2. #2
    Senior Member vistalad's Avatar
    Join Date
    Jan 2009
    Quote Originally Posted by JohnDoe2 View Post
    JPMorgan and Citigroup said they don’t anticipate a material impact on operations or their ability to serve clients.
    Fines are just another cost of doing business. And since nobody's going to jail, this investigation will not accomplish anything by way of deterring future actions.
    Americans first in this magnificent country

    American jobs for American workers

    Fair trade, not free trade

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