Five Major Banks Reach Forex Rigging Probe Settlements

(RTTNews) - Five of the world's largest banks, including US financial giants JPMorgan Chase & Co. (JPM) and Citigroup, Inc. (C) have Wednesday reached settlements totaling about $5.7 billion with financial regulators in the U.S., the U.K., and Switzerland to resolve charges of foreign exchange rate rigging. It also includes resolution of private U.S. class action claims.

The other major banks involved in the currency manipulation settlements are Swiss banking giant UBS AG (UBS) as well as British lenders Barclays Plc (BCS, BARC.L) and Royal Bank of Scotland Group Plc (RBS, RBS.L).

The investigations by the regulators were focused on the spot FX trading activities as well as controls applicable to those activities. The traders are charged of colluding and sharing information about client orders to manipulate prices.

JPMorgan announced that it will plead guilty to a single antitrust violation and pay a fine of $550 million to the U.S. Department of Justice (DOJ). It has also agreed to the entry of a Consent Order with the Federal Reserve (Fed) and will pay a fine of $342 million. The company said it has already made reservations for these settlements.

The DOJ agreement will be submitted to the court for its consideration. The Fed Agreement is effective immediately.

Citigroup agreed plead guilty to a violation of the Sherman Antitrust Act and willpay a fine of $925 million to the DoJ. It has also agreed to the entry of a cease and desist order and a civil money penalty of $342 million with the Fed.

Citigroup has also reached a settlement related private U.S. class action claims for a payment of $394 million, subject to court approval. Citigroup confirmed that all the three payments are covered by existing legal reserves and will not require a charge to earnings in the second quarter of 2015.

Meanwhile, UBS has agreed to plead guilty to one count of wire fraud for conduct in the LIBOR matter, pay a $203 million fine and accept a three-year term of probation. The Fed and the Connecticut Department of Banking (CT DOB) jointly issued a cease and desist order finding that UBS engaged in unsafe and unsound business practices relating to its FX business. UBS will pay a penalty of $342 million to the Fed and has agreed to undertake a series of remedial measures. However, UBS has not been criminally charged for FX conduct. UBS is fully provisioned for these resolutions.

Barclays has reached settlements with the FCA, the DoJ, the Fed, the CFTC, and the New York State Department of Financial Services (DFS), agreeing to pay a combined total of 1.53 billion pounds or $2.38 billion. Barclays has also agreed to plead guilty to a violation of US anti-trust law. The fines imposed under the settlements are covered by existing provisions of 2.05 billion pounds, including those taken by Barclays in its Q1 2015 results.

RBS has also agreed to enter a guilty plea and will pay penalties of $395 million to the DoJ and $274 million to the Fed to resolve the FX investigations.

All the banks continue to cooperate with still-pending investigations being conducted by other regulators relating to FX trading business.

Citigroup and JPMorgan have now resolved a significant number of its foreign exchange investigations. These settlements are in addition to agreements announced in November 2014 with the U.K. Financial Conduct Authority (FCA), the U.S. Commodity Futures Trading Commission (CFTC) and the U.S. Office of the Comptroller of the Currency (OCC) relating to the FX trading business.

UBS had also earlier in November 2014 reached settlements with the Swiss Financial Market Supervisory Authority, the FCA and the CFTC. RBS also had reached settlements with the FCA and the CFTC in November 2014.