Six Major Banks Agree to Pay Over $5.8 Billion in Penalties for FX Market Manipulation and Libor Scandal

Strategic Insights -

Five of the six major banks involved, including UBS AG, Barclays Bank PLC, Citigroup Inc., JPMorgan Chase & Co., and Royal Bank of Scotland PLC (RBS), agreed to plead guilty to conspiring to manipulate the price of U.S. dollars and euros exchanged in the FX markets. The banks used an exclusive electronic chat room and coded language to manipulate benchmark exchange rates, affecting hundreds of billions of dollars worth of transactions every day. The total fines and penalties paid by the five banks in the DOJ investigation for their conduct in the FX spot market are nearly $9 billion.

Key Takeaways:

  • Five major banks (UBS AG, Barclays Bank PLC, Citigroup Inc., JPMorgan Chase & Co., and Royal Bank of Scotland PLC (RBS)) agreed to plead guilty to conspiring to manipulate FX markets.
  • The banks used an exclusive electronic chat room and coded language to manipulate benchmark exchange rates, affecting hundreds of billions of dollars worth of transactions every day.
  • The four banks (Citicorp, JPMorgan Chase, Barclays, and RBS) agreed to pay criminal fines totaling more than $2.5 billion.
  • The total fines and penalties paid by the five banks in the DOJ investigation for their conduct in the FX spot market are nearly $9 billion.
  • UBS agreed to plead guilty to manipulating the Libor and other benchmark interest rates and pay $203 million in criminal penalty.
  • The Federal Reserve announced fines totaling more than $1.8 billion against the six banks for their unsafe and unsound practices in the FX markets.
  • The banks were required to improve their policies and procedures for oversight and controls over activities in the wholesale FX and similar types of markets.
  • Barclays settled related claims with other regulators, including the New York State Department of Financial Services, the Commodity Futures Trading Commission, and the UK's Financial Conduct Authority, for an additional combined penalty of approximately $1.3 billion.

Statistics:

  • Total fines and penalties paid by five banks in the DOJ investigation: $9 billion
  • Criminal fines paid by four banks (Citicorp, JPMorgan Chase, Barclays, and RBS): $2.5 billion
  • Total fines and penalties paid by six banks to the Federal Reserve: $1.8 billion
  • Fees imposed on UBS, Barclays, Citigroup, JPMorgan, RBS: $342 million each
  • Fine imposed on BOA: $205 million

Sources:

  • Xinhua News Agency
  • COMTEX
  • United States Department of Justice
  • Federal Reserve
  • Barclays
  • Citigroup Inc.
  • JPMorgan Chase & Co.
  • Royal Bank of Scotland PLC (RBS)
  • UBS AG
  • New York State Department of Financial Services
  • Commodity Futures Trading Commission
  • UK's Financial Conduct Authority
  • Comtex News Network, Inc.