Major banks admit guilt in forex probe, fined $6 bln

Four major banks pleaded guilty on Wednesday to trying to manipulate foreign exchange rates and six banks were fined a total of nearly $6 billion in a settlement that substantially ends a global probe into misconduct in the $5-trillion-a-day market.
In total, authorities in the United States and Europe have fined seven banks over $10 billion for failing to stop their forex traders from sharing confidential information about client orders and coordinating trades to boost their own profits. Traders at Citigroup, JP Morgan, Barclays and Royal Bank of Scotland, who described themselves as andquotThe Cartelandquot, used an invitation-only electronic chatroom and coded language to manipulate the price of US dollars and euros between December 2007 and January 2013, according to US authorities. The four banks pleaded guilty to conspiring to manipulate the foreign exchange market. The misconduct occurred after regulators had started punishing banks for rigging the London interbank offered rate (Libor), an interest rate benchmark.
Britainand’s Barclays faced the biggest fine on Wednesday with a penalty of $2.4 billion because it did not join in an earlier November settlement with British and some US authorities due to complications with its regulator in New York. Barclays fired 8 employees as part of its settlement and New Yorkand’s Superintendent of Financial Services warned that it was still probing the bankand’s use of electronic systems for foreign exchange trading, which make up the vast majority of transactions in the market. andquotPut simply, Barclays employees helped rig the foreign exchange market. They engaged in a brazen and’heads I win, tails you loseand’ scheme to rip off their clients,andquot Benjamin Lawsky said in a statement. andquotWhile todayand’s action concerns misconduct in spot trading, there is additional work ahead.andquot

SOURCE: Today’s Zaman