Top banks fined $6 billion for fixing rates

New York: The US and British regulators have fined six major global banks nearly $6 billion Wednesday for rigging the foreign exchange market and Libor interest rates. The far-flung settlement included guilty pleas from Barclays Bank, JPMorgan Chase, Citicorp and the Royal Bank of Scotland for conspiring to manipulate the massive currency market, as well as a guilty plea from Switzerland’s UBS, for violating a prior settlement of Libor charges.

These five banks agreed to a record $2.5 billion in criminal penalties, the largest set of anti-trust fines ever obtained by the department of justice. All five, plus the Bank of America, will also pay more than $1.8 billion in fines to the Unites States’s Federal Reserve over “unsafe and unsound practices” in forex markets. The massive settlement addresses what regulators described as a brazen scheme by financial heavyweights to orchestrate trades in the $5.3-trillion-per-day global foreign exchange market in ways that cheated clients and bolstered their own profits.

Traders from the banks, communicating in a chat room referred to as “the Cartel”, agreed to withhold bids or offers for euros or dollars at distinct times to protect each other’s trading positions, the justice department said. The bank’s chat room nickname “aptly describes the brazenly illegal behavior they were engaged in on a near-daily basis,” said Unites State’s attorney general Loretta Lynch.
“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,” Ms Lynch informed.

“And their actions inflated the banks’ profits while harming countless consumers, investors and institutions around the globe.” This follows earlier agreements between large banks and global regulators in a massive global probe into rigging forex trade.