#AceFinanceNews – LONDON – Nov.12 – Five of the world’s biggest banks have today been handed fines totalling more than £2billion for rigging the £3.5trillion-a-day foreign exchange market.
British, US and Swiss authorities all launched an onslaught after an 18-month investigation as regulators today revealed the latest scandal to rock the industry.
State-owned Royal Bank of Scotland has been fined £217million ($344million) by the London-based Financial Conduct Authority (FCA) as well as £182million ($290million) by the US Commodity Futures Trading Commission (CFTC).
The others involved in the settlement are Citibank, HSBC, JPMorgan Chase and UBS, who will also pay up to £500million each. Barclays said it continues to hold discussions with regulators.
More than 30 traders have been fired, suspended, put on leave, or resigned since the probes started, and the Serious Fraud Office has launched a criminal investigation – but there have been no arrests.
The FCA said today that bankers, who referred to themselves as the ‘A-Team’ and ‘Three Musketeers’, colluded on-line by sharing information about foreign exchange orders so they could make cash for their banks and bag big bonuses themselves.
The FCA has said it issued the record fines because five banks were failing to control business practices in their foreign exchange trading operations.
Barclays will be next to be punished.
Its penalties dwarf the £532 million imposed by the regulator on banks and City brokers over the previous big regulatory scandal involving the manipulation of the interbank lending rate, Libor.
RBS chief executive Ross McEwan said: ‘To say that I am angry about the misconduct would be an understatement.
‘We had people working at this bank who did not know the difference between right and wrong, or worse, didn’t care about the distinction.’
The FCA said traders at different banks formed tight-knit groups in which information was shared about client activity, including using code names to identify clients without naming them.
Names given to these groups included ‘the players’, ‘the 3 musketeers’, ‘1 team, 1 dream’, ‘a co-operative’ and ‘the A-team’. Traders shared the information obtained through these groups to help them work out their trading strategies.
FCA chief executive Martin Wheatley said: ‘Today’s record fines mark the gravity of the failings we found and firms need to take responsibility for putting it right.
‘They must make sure their traders do not game the system to boost profits or leave the ethics of their conduct to compliance to worry about.’
An inquiry by the Bank of England found that no official was involved in any unlawful or improper behaviour in the forex market.
#AceFinanceNews says according (Reuters) – Several large U.S. banks have set aside extra money to pay for potential legal costs in part because of JPMorgan Chase & Co’s massive $13 billion settlement with U.S. authorities over bad mortgages, according to two sources familiar with the situation.
The size of the JPMorgan settlement, which the government called the largest in U.S. history, led many banks to realize that the cost of resolving some of their own legal problems was likely to be higher than they had initially believed, the sources said.
Justice Department officials have said in public statements they want to use the JPMorgan settlement as a template for deals with other banks.
Bank of America, Citigroup, Goldman Sachs and Morgan Stanley all added hundreds of millions of dollars to funds they have set aside to pay for the cost of litigation, including legal fees, fines and settlements. All four banks are facing mortgage-related investigations by federal prosecutors located in different parts of the country.
The increase in such funds impacted the fourth quarter results of the banks published this week, surprising many analysts.