Banks fined $3.2B in foreign exchange probe
Regulators in the U.K., U.S. and Switzerland imposed civil penalties of $3.2 billion Wednesday on five banks they said attempted to manipulate the $5.3-trillion-a-day foreign exchange currency-trading market.
The regulators said foreign exchange traders used private Internet chat rooms to share information about the trading activities of their firms' clients and to collude on strategies to try to manipulate benchmark exchange rates for pairs of leading world currencies such as the British Pound and U.S. dollar and the U.S. dollar and the Japanese yen.
The U.K's Financial Conduct Authority (FCA) announced it fined JPMorgan Chase $352 million, Citibank $358 million, HSBC $343 million, the Royal Bank of Scotland $344 million and UBS $371 million.
The Commodity Futures Trading Commission (CFTC) said it imposed more than $1.4 billion in penalties — $310 million each for Citibank and JPMorgan, $290 million each for RBS and UBS, and $275 million for HSBC.
Swiss regulator FINMA ordered UBS to pay $139 million.
Barclays withdrew from the settlement talks. It said in a statement, it considered a deal on "closely similar terms" to those announced on Wednesday but that after discussions with other regulators and authorities it had decided to seek "a more general coordinated settlement."
The FCA said it would continue its investigation into the firm, and added that it was launching an industry-wide remediation program to ensure companies address the root causes of the failing and drive up standards.
It said the fines were the largest it, or its predecessor the Financial Services Authority, had ever imposed.
The FCA said traders at the banks shared confidential client information and attempted to manipulate spot foreign exchange rates for 10 major currencies. Between January 2008 and October 2013, they colluded with traders at other firms "in a way that could disadvantage those clients and the market," the FCA said.
The regulator said it found traders at different banks shared information about client activity by using code names to identify clients without naming them. The code names included "the players," "the 3 musketeers," "1 team, 1 dream," "a co-operative" and "the A-team."
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