From the News Desk at Consumer Rights Defenders reachable at 818.453.3585…for litigation support……THE BANKS ARE PUNISHED! Litigation Pointer: Did you know that Banks must disclose in Discovery any criminal felony convictions and some moral turpitude convictions….read the evidence codes of your state….now, read this.
WASHINGTON (AP) — Four global banks agreed Wednesday to pay more than $5 billion in penalties and plead guilty to rigging the world’s currency market, the first time in more than two decades that major players in the financial industry have admitted to criminal wrongdoing on such a scale.
Traders at JPMorgan Chase, Citigroup, Barclays and the Royal Bank of Scotland conspired among themselves to fix exchange rates on U.S. dollars and euros, according to a resolution announced by the banks and the Justice Department. The currency traders, who called themselves “The Cartel,” allegedly shared customer orders through chat rooms and used that information to profit at their clients’ expense.
The resolution is complex and involves multiple regulators in the U.S. and overseas.
The four banks will pay a combined $2.5 billion in criminal penalties to the Justice Department for criminal manipulation of currency rates between 2007 and 2013. The Federal Reserve is slapping them with an additional $1.6 billion in fines, as the banks’ chief regulator. Finally, Britain’s Barclays is paying an additional $1.3 billion to British and U.S. regulators for its role in the scheme.
Another bank, Switzerland’s UBS, has agreed to plead guilty to manipulating key interest rates and will pay a separate criminal penalty of $203 million.
Big banks have already been fined billions for their role in the housing bubble and subsequent financial crisis. Even so, the latest penalties are big. Including an agreement announced last year, the group of banks will pay nearly $9 billion in fines for manipulating the $5.3 trillion currency market.
Still, the penalties pale in comparison to the banks’ profits. JPMorgan Chase had $4.1 billion in revenue from its fixed income and currencies business in the first quarter of this year alone, while Citi had $3.48 billion.
It is rare to see a bank plead guilty to wrongdoing. Even in the aftermath of the financial crisis, most financial companies reached “non-prosecution agreements” or “deferred prosecution agreements” with regulators, agreeing to pay billions in fines but not admitting any guilt. If any guilt was acknowledged, it was usually by one of the bank’s subsidiaries or divisions – not the overall company.
One of the most notable financial institutions to plead guilty to criminal wrongdoing was investment bank Drexel Burnham Lambert. It pleaded guilty to fraud in the 1980s after the junk bond bubble burst.
Unlike the stock and bond markets, currencies trade nearly 24 hours a day, seven days a week. The market pauses two times a day, a moment known as “the fix.” Traders in the cartel allegedly shared client orders with rivals ahead of the “fix” and pumped up currency rates to make profits.
Global companies, which do business in multiple currencies, rely on their banks to give them the closest thing to an official exchange rate each day. The banks are supposed to be looking out for them instead of conspiring to get even bigger profits by using customers’ orders against them. Travelers who regularly exchange currencies also need to get a fair price for their euros or dollars.
The number of traders who took part in the currency fixing was small. JPMorgan said the one trader involved has been fired. Citi said it fired nine employees.
The agreement with the Justice Department is subject to court approval. If it is approved, all five banks will be put on three years of corporate probation. They will also help prosecutors investigate individuals who took part in the rigging.
Our readers offer the following:
Sue the banks for every charge they levy on you. Attorney Tim M. Orlando, Fla.
Everyone should consider a private suit in small claims court for overcharges to your account. It would cost the banks millions to defend of citizens sued them for this fraud. Charlotte M., Boston, Mass.