Citigroup, JP Morgan Chase, Barclays, UBS and Royal Bank of Scotland are amongst the 5 banking giants that have pled guilty to attempting to manipulate foreign exchange rates. Two other banks settled another dispute with similar charges regarding manipulation of the FX market. US and UK regulators accused Citigroup, JP Morgan Chase, Barclays, UBS and Royal Bank of Scotland of openly lying to clients to pad their own profits. The companies were found guilty of using invitation-only chat rooms and coded language to coordinate the trades.
The manipulation happened up until 2013, after officials started pushing back against banks for manipulating the London interbank offered rate (Libor). The forex market sees over US$5 trillion worth of different currencies flow through it everyday and it is used by millions of people. In total, authorities in both the US and Europe have fined seven banks over US$10bn for misconduct in the FX market. “The penalty all these banks will now pay is fitting, considering the long-running and egregious nature of their anti-competitive conduct," said US Attorney General Loretta Lynch.
However, investigators say their inquiries are far from over. Regulators are now saying that may consider going after individuals who were part of the manipulation scheme. In the US, Federal and State agencies are both probing companies and individuals who attempted to rig the forex market. The cases against large multinational banks are both increasing and the punishments are becoming more severe. In this case, the US Department of Justice forced Citicorp, JP Morgan, Barclays and Royal Bank of Scotland to plead guilty to the US criminal charges. US regulators are now going after the global parent companies of banks rather than their foreign owned subsidiaries.
Author: Simon Herrmann
May 22, 2015
Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.