Exchange rate case nears end
Criminal probe of 4 banks to yield billions in fines
Citigroup, JPMorgan Chase, Barclays and Royal Bank of Scotland are set to pay billions of dollars in collective penalties and plead guilty to manipulating foreign-exchange rates in settlements expected to be announced as soon as today, according to people familiar with the matter.
Marking the latest results from a global crackdown on financial corruption, the banks are expected to enter guilty pleas to criminal anti-trust charges as one part of broad settlements with the U.S. Department of Justice and other U.S. and overseas authorities and regulators, one of the people said.
The people spoke on condition of anonymity because they were not authorized to discuss the case publicly until final details of the settlements were completed and made public.
The precise size of the total penalties was unavailable Tuesday. However, the four banks have increased their financial reserves in preparation for the settlements, according to recent public filings. Barclays alone re- ported it had boosted the British bank’s legal reserves for investigations and litigation primarily related to foreign exchange to approximately $3.8 billion.
Swiss banking giant UBS had been expected to win immunity from prosecution because its officials came forward and cooperated with investigators.
However, Department of Justice officials told UBS that its traders’ involvement in alleged rate-rigging would require the bank to plead guilty to separate charges of manipulating a financial benchmark that’s used to set rates on trillions of dollars in mortgages, loans and credit cards, according to The Wall Street
Journal and Bloomberg Business.
That investigation focused on alleged rigging of the London Interbank Offered Rate, popularly known as Libor. It ended with a 2012 settlement that had enabled UBS to avoid prosecution by U.S. authorities.
The foreign-exchange investigation gathered evidence allegedly showing that bank traders manipulated the $5.3-trillion-aday market by colluding to push currency rates up or down in ways that benefited their own transactions. Six banks, including JPMorgan, Citgroup and Bank of America (BAC), agreed to pay $4.3 billion in a separate November settlement of similar civil allegations filed by U.S., British and Swiss financial regulators.