Regulation

EU Fines Banks Billions For Manipulating Currency Prices

EU Fines Banks For Manipulating Currency Prices

The European Union has slapped Barclays, RBS, Citigroup, JPMorgan and MUFG with a €1.07bn fine over allegations that they worked together to manipulate the foreign exchange market.

According to a report in the Financial Times, EU officials found that the banks used two separate chat rooms to share information about orders, prices and trading activities in order to manipulate the spot markets for 11 currencies. Citigroup faces the biggest fine of  €311m, while RBS was fined €249m and JPMorgan has to pay €229m. Barclays was fined €210m and Japan’s MUFG was hit with a roughly €70m fine. UBS did not face a fine, because while it participated in the activities, it also alerted the EU to the two existing cartels. The banks that were fined opted to settle and thus received a 10 percent deduction of the penalty.

The EU fines cap off a long-running investigation by regulators around the world into the banks’ manipulation of currency. The allegations first came to light in 2013. The collusion reportedly dates back to 2007, involving the euro, pound, yen and Swiss franc; the U.S., Canadian, New Zealand and Australian dollars; and the Danish, Swedish and Norwegian crowns. Traders were able to use the shared information to buy or sell currencies. In some instances, the traders were able to coordinate with each other.

Banks have faced fines from the U.S., UK, Switzerland and Singapore to the tune of more than $10 billion. Lawsuits in the U.S. and UK are still ongoing. With the EU inquiry concluded, civil suits are expected to be launched in Europe. The paper noted that law firm Scott and Scott is ready to launch a class-action lawsuit in Europe similar to the one in the U.S., which resulted in a $2.3 billion settlement with 15 banks.

“Foreign exchange spot trading activities are one of the largest markets in the world, worth billions of euros every day,” said Margrethe Vestager, European competition commissioner, when announcing the fines. “Today we have fined Barclays, the Royal Bank of Scotland, Citigroup, JPMorgan and MUFG Bank, and these cartel decisions send a clear message that the Commission will not tolerate collusive behavior in any sector of the financial markets.”

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New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

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