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Six major banks agreed to pay a total of more than 5.8 billion U.S. dollars in penalties for their illegal and unsafe conducts in the foreign exchange (FX) markets and for manipulating the benchmark interest rate, London Interbank Offered Rate (Libor).
The six banks are UBS AG, Barclays Bank PLC, Citigroup Inc., JPMorgan Chase & Co., Royal Bank of Scotland PLC (RBS), and the Bank of America Corporation (BOA). Except for the BOA, the other five banks agreed to plead guilty in the Department of Justice's ( DOJ) investigation in their misconducts in the FX markets and the Libor manipulation. The Bank of America was not part of the actions taken by the DOJ and has not been charged by the Department in this matter.
According to a statement released by the Justice Department on Wednesday, Citicorp, JPMorgan Chase, Barclays, and RBS have agreed to plead guilty to conspiring to manipulate the price of U.S. dollars and euros exchanged in the FX markets and agreed to pay criminal fines totaling more than 2.5 billion dollars.
The statement said traders from the four banks, self-described members of "The Cartel", used an exclusive electronic chat room and coded language to manipulate benchmark exchange rates to make profit at the expense of consumers, institutions and investors around the globe between 2007 and 2013.
In this settlement, the Citicorp parent Citigroup will pay a fine of 925 million dollars; Barclays will pay 650 million dollars; JPMorgan will pay 550 million dollar; and RBS will pay 395 million dollars.
"The charged conspiracy fixed the U.S. dollar-euro exchange rate, affecting currencies that are at the heart of international commerce and undermining integrity and the competitiveness of foreign currency exchange markets which account for hundreds of billions of dollars worth of transactions every day," said Assistant Attorney General Baer in the DOJ statement.
UBS has agreed to plead guilty to manipulating the Libor and other benchmark interest rates and pay 203 million dollars in criminal penalty.
Separately, the Federal Reserve on Wednesday also announced fines totaling more than 1.8 billion dollars against the six banks for their unsafe and unsound practices in the FX markets. The fines, among the largest ever assessed by the Fed, included 342 million dollars each for UBS, Barclays, Citigroup, JPMorgan, 274 million for RBS and 205 million for BOA.
The Fed also issued orders requiring these banks to improve their policies and procedures for oversight and controls over activities in the wholesale FX and similar types of markets.
In connection with the FX investigation, 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 dollars.
The resolutions released on Wednesday bring the total fines and penalties paid by the five banks in the DOJ investigation for their conduct in the FX spot market to nearly 9 billion dollars, said the DOJ.
"The penalty these banks will now pay is fitting considering the long-running and egregious nature of their anticompetitive conduct," said Attorney General Loretta Lynch in the statement.
