Nov 12, 2014/Bloomberg
Regulators in the U.S., Britain and Switzerland ordered five banks to pay about $3.3 billion to settle a probe into the manipulation of benchmark foreign-exchange rates.
Switzerland’s UBS AG was ordered to pay the most at $800 million, according to statements from the U.S. Commodity Futures Trading Commission, Britain’s Financial Conduct Authority and Swiss Financial Market Supervisory Authority. Citigroup Inc. was ordered to pay $668 million, followed by JPMorgan Chase & Co. at $662 million, the filings show. Royal Bank of Scotland Group Plc paid $634 million and HSBC Holdings Plc paid $618 million.
“Countless individuals and companies around the world rely on these rates to settle financial contracts,” Aitan Goelman, the CFTC’s director of enforcement said in the statement. “The market only works if people have confidence that the process of setting these benchmarks is fair.”
The settlements are the first since authorities around the world began investigating allegations last year that dealers at the biggest banks colluded with counterparts at other firms to rig benchmarks used by fund managers to determine what they pay for foreign currency. The probes have expanded to include whether traders used confidential information to take bets on unauthorized personal accounts, and whether sales desks charged clients excessive commissions in the $5.3 trillion-a-day market.
‘Shared Information’
“They shared information about clients’ activities which they had been trusted to keep confidential and attempted to manipulate G10 spot foreign-exchange currency rates, including in collusion with traders at other firms, in a way that could disadvantage those clients and the market,” the FCA said.
The FCA said its fines relate to “ineffective” controls at the banks between Jan. 1, 2008 and Oct. 15, 2013 that allowed the banks to put their “interests ahead of those of their clients, other market participants and the wider U.K. financial system.” These failings allowed traders at the banks to behave “unacceptably,” the FCA said.
The FCA said it would “progress” its probe into Britain’s Barclays Plc, which wasn’t fined today, to cover its wider foreign exchange trading business.
“We will continue to engage with these authorities, including the FCA and CFTC, with the objective of bringing this to resolution in due course,” Barclays said in a statement.
The fines come more than two years after the first banks settled with U.K. and US authorities over allegations they rigged the London interbank offered rate, a benchmark interest rate used in $300 trillion of securities including swaps and home loans. A dozen firms have so far been fined at least $6.5 billion in investigations related to Libor and its derivatives.
The Libor investigations, which have not yet concluded, were a catalyst for a broader review of dozens of benchmarks used in markets from oil to precious metals.
(An earlier version of this story corrected RBS’s total penalties.)
