Big Banks Plead Guilty To Market Manipulation, Will Pay $5.8 Billion

WASHINGTON, DC - MAY 20: U.S. Attorney General Loretta Lynch announces a resolution has been reached with global financial institutions in connection with long-running manipulation of the $5 trillion-a-day Foreign Exchange (FOREX) spot market during a news conference at the Robert F. Kennedy Justice building May 20, 2015 in Washington, DC. Lynch announced settlements with five of the world's biggest international banks, including Swiss bank UBS which will pay $545 million to U.S. authorities to end an investigation into alleged manipulation of currency rates. (Photo by Chip Somodevilla/Getty Images)

The age of multibillion-dollar bank fines with no admission of wrongdoing is over. The Justice Department announced Wednesday morning that five banks pleaded guilty to market manipulation, while also paying billions of dollars in fines.

Barclays, Citigroup, J.P. Morgan and the Royal Bank of Scotland admitted to illegally distorting foreign exchange markets. The banks formed what they called “The Cartel” and aimed to set a key currency marker, known as “the fix,” at mutually beneficial values.LORETTA LYNCHThe fix is set every day at 4 p.m. London time and is used in the more than $5 trillion currency market to determine the price of trades and the value of large institutional holdings. Traders at the banks used instant messaging chat rooms to discuss where to set the fix.

In addition to admitting guilt, the banks will also pay fines. Barclays will pay $650 million, Citigroup $925, million J.P. Morgan $550 million and RBS $395 million. Barclays will pay another $1.3 billion to New York State, federal and U.K. regulators.

A fifth bank, UBS, pleaded guilty to manipulating the London Interbank Offered Rate, which is called Libor. Libor is the most important international interest rate benchmark. UBS will pay $545 million in fines to the Justice Department and Federal Reserve. The value of more than $300 trillion in debt is tied to Libor.

The five banks will pay a further $1.6 billion in fines to the Federal Reserve.

Source: Huffington Post


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