Banks fined more than US$5B, to plead guilty to market rigging

[webfact]

Banks fined more than $5B, to plead guilty to market rigging
By KEN SWEET and ERIC TUCKER

WASHINGTON (AP) — Four of the world's biggest banks agreed Wednesday to pay more than $5 billion in penalties and plead guilty to rigging the currency markets — a rare instance in which federal prosecutors have wrung an admission of criminal wrongdoing from a major financial institution.

Traders at JPMorgan Chase, Citigroup, Barclays and the Royal Bank of Scotland were accused of working together to manipulate rates on the foreign exchange market, where hundreds of billions of dollars and euros change hands back and forth.

The penalties are a victory for the government and reflect a broader effort by the Justice Department, long criticized as reluctant to prosecute big banks, to tackle financial misconduct.

In the past 18 months, prosecutors have brought criminal cases against banks accused of tax evasion and sanctions violations, and have reached multibillion-dollar settlements with several others for their roles in the 2008 financial meltdown.

Still, the punishment announced Wednesday may have limited practical consequences.

The four banks will be able to continue to do business in the currency markets. No executives were charged, though that part of the investigation continues. And the fines, while large, are a fraction of what the institutions have made through currency trading over the past decade.

Prosecutors said traders shared customer orders through chat rooms and used that information to profit at their clients' expenses. The traders called themselves "The Cartel," and in one of those chat rooms, a Barclays employee wrote: "if you aint cheating, you aint trying," investigators said.

The banks will pay a combined $2.5 billion in criminal penalties for manipulation of currency rates between 2007 and 2013. The Federal Reserve is slapping them with an additional $1.6 billion in fines. Finally, Britain's Barclays is paying an additional $1.3 billion to British and U.S. regulators.

A fifth bank, Switzerland's UBS — which was scrutinized years earlier in a similar scheme — has agreed to plead guilty to manipulating key interest rates and will pay a separate criminal penalty of $203 million.

"Having to enter into a guilty plea, at the parent level by a major financial institution, is not something that they enter into lightly, nor is it something they enter into with any great joy in their hearts," Attorney General Loretta Lynch said.

All told, 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, 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 meltdown, most financial companies reached "non-prosecution agreements" or "deferred prosecution agreements" with regulators, agreeing to pay tens of billions in fines but not admitting any guilt. If any wrongdoing was acknowledged, it was usually by one of the bank's subsidiaries or divisions, not the overall company.

An earlier case against UBS underscores the difficulty of deterring banks from bad behavior.

In 2012, the bank admitted manipulating interest rates and signed a non-prosecution agreement with the Justice Department. But after it became clear that UBS was involved in currency rate manipulation, the government tore up that agreement and imposed new penalties.

"Unlike the other banks, UBS has a 'rap sheet' that simply cannot be ignored," said Leslie Caldwell, head of the Justice Department's criminal division. "Enough simply is enough."

UBS said it received partial immunity from the currency market charges by being the first bank to report the corruption to the Justice Department and cooperate.

Unlike stocks and bonds, 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 do business in multiple currencies and 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. 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 it has fired one trader. Citi said it dismissed nine employees. Barclays has fired eight employees tied to "The Cartel," according to New York regulators.

The banks have agreed to help prosecutors investigate individuals who took part in the rigging.
____

Sweet contributed to this report from New York.


-- (c) Associated Press 2015-05-21

[meatboy]

according to a banking expert on bbc.news barclays fined 1,500,000,000 gbp.was lose change to what profits they made.

anybody go to jail.

[Tatsujin]

Well, that's a half arsed job they're doing going after the banks ... guess they've got too many people in their pockets to really pay for what they've done.

[alfalfa19]

the biggest crooks make the most money, and do the least amount of time (if any, none in this case, evidently) this amount is a trifle to them, but they may still find a way to make their depositors pay for it.

[GrahamMaddison]

so how has this affected the exchange rate of my UK Pension? ....have I lost money as a result?

maybe I need to take out a private prosecution and reap the rewards .. I wish.

[soalbundy]

Monopoly with real money, ''pay $200, do not go to jail card''

[jaaaason]

The problem with these fines is that the banks are having to pay them. Which means the shareholders are the ones who actually have to foot the bill for their breaking the law. Additionally the fines actually do not even come close to the revenue generated by these activities. As these events were going on many of the bankers were being paid millions of dollars in bonus's. Those are the one's who actually did the acts. Yet they walk away untouched and wealthy.

Same as with the Libor Scandal,and the market manipulation of the metals prices (which was just settled). In the U.S. only one individual was actually charged , head of Countrywide Mortgage,or then that all of wall street has walked away clean.In reality it pays to be the CEO of one of the largest companies who started the loan packaging scheme(Hank Paulson) he was rewarded with the job of Sec. Treasure (talk about fox in the hen house). Additionally by taken that position he was able to avoid paying 30million in taxes when he sold his Goldman shares.....people sometimes complain about the petty corruption here in Thailand , but in the advanced countries we have just made corruption legal.....

[BlackJack]

J P Morgan - read the Monster from Jeckle Island and you will understand how far back the deception goes

[ALLSEEINGEYE]

They make trillions and get fined a few billion. While to poor get poorer. Business as usual. I hope one day there is a revolt against these scumbags.

[JakeSully]

Meanwhile the GOP is drafting bills to reduce the jurisdiction of the government against the big banks..

[rethaier]

So the banks steal trillions and are fined $5bn. That should deter them eh? Right now they will be rubbing their greedy little hands together saying what's next.

[Baerboxer]

The problem with these fines is that the banks are having to pay them. Which means the shareholders are the ones who actually have to foot the bill for their breaking the law. Additionally the fines actually do not even come close to the revenue generated by these activities. As these events were going on many of the bankers were being paid millions of dollars in bonus's. Those are the one's who actually did the acts. Yet they walk away untouched and wealthy.

Same as with the Libor Scandal,and the market manipulation of the metals prices (which was just settled). In the U.S. only one individual was actually charged , head of Countrywide Mortgage,or then that all of wall street has walked away clean.In reality it pays to be the CEO of one of the largest companies who started the loan packaging scheme(Hank Paulson) he was rewarded with the job of Sec. Treasure (talk about fox in the hen house). Additionally by taken that position he was able to avoid paying 30million in taxes when he sold his Goldman shares.....people sometimes complain about the petty corruption here in Thailand , but in the advanced countries we have just made corruption legal.....

Correct. It's people who act and knowingly break the law. Driven by the large bonuses and knowledge that personal accountability is very rare.

The banks involved will pay the fines and then business as usual. Those bank employees who were fired should be charged for starters. They must have done something wrong or they wouldn't have been fired.

In other industries, people who knowingly commit fraud for personal gain would be arrested and prosecuted. For bankers it seems acceptable behavior. And when the shit does it the fan, the "firm" pays off the justice system. Strapped for cash governments are no doubt eager to accept the pay off.

How many bankers have been arrested, charged and prosecuted in the last 10 years, or as a result of the 2008 crash and all the scandals that have since come to light? How many innocent lives have been ruined, or made considerably worse due to the actions of these greedy, immoral, criminal few?

And, nothing will change.

[hawker9000]

The problem with these fines is that the banks are having to pay them. Which means the shareholders are the ones who actually have to foot the bill for their breaking the law. Additionally the fines actually do not even come close to the revenue generated by these activities. As these events were going on many of the bankers were being paid millions of dollars in bonus's. Those are the one's who actually did the acts. Yet they walk away untouched and wealthy.

Same as with the Libor Scandal,and the market manipulation of the metals prices (which was just settled). In the U.S. only one individual was actually charged , head of Countrywide Mortgage,or then that all of wall street has walked away clean.In reality it pays to be the CEO of one of the largest companies who started the loan packaging scheme(Hank Paulson) he was rewarded with the job of Sec. Treasure (talk about fox in the hen house). Additionally by taken that position he was able to avoid paying 30million in taxes when he sold his Goldman shares.....people sometimes complain about the petty corruption here in Thailand , but in the advanced countries we have just made corruption legal.....

Exactly. These penalty fines are meaningless except possibly to investors & shareholders who have absolutely nothing to do with the wrongdoing. Only individual criminal penalties will effectively disincentivize such misbehavior.

[Cats4ever]

Big government needs to get out of the way of business, so we can all be better off. Don't ask me to explain the aforementioned statement, I can't.

[elgordo38]

The problem with these fines is that the banks are having to pay them. Which means the shareholders are the ones who actually have to foot the bill for their breaking the law. Additionally the fines actually do not even come close to the revenue generated by these activities. As these events were going on many of the bankers were being paid millions of dollars in bonus's. Those are the one's who actually did the acts. Yet they walk away untouched and wealthy.

Same as with the Libor Scandal,and the market manipulation of the metals prices (which was just settled). In the U.S. only one individual was actually charged , head of Countrywide Mortgage,or then that all of wall street has walked away clean.In reality it pays to be the CEO of one of the largest companies who started the loan packaging scheme(Hank Paulson) he was rewarded with the job of Sec. Treasure (talk about fox in the hen house). Additionally by taken that position he was able to avoid paying 30million in taxes when he sold his Goldman shares.....people sometimes complain about the petty corruption here in Thailand , but in the advanced countries we have just made corruption legal.....

Correct. It's people who act and knowingly break the law. Driven by the large bonuses and knowledge that personal accountability is very rare.

The banks involved will pay the fines and then business as usual. Those bank employees who were fired should be charged for starters. They must have done something wrong or they wouldn't have been fired.

In other industries, people who knowingly commit fraud for personal gain would be arrested and prosecuted. For bankers it seems acceptable behavior. And when the shit does it the fan, the "firm" pays off the justice system. Strapped for cash governments are no doubt eager to accept the pay off.

How many bankers have been arrested, charged and prosecuted in the last 10 years, or as a result of the 2008 crash and all the scandals that have since come to light? How many innocent lives have been ruined, or made considerably worse due to the actions of these greedy, immoral, criminal few?

And, nothing will change.

Yeah they tie the can to the tail of the little guy and the CEO walks away with bags of bonuses and his fat salary. They now make over 300 times what their workers make at one time it was 30 to 1. Make no mistake we are under attack by the system. It is rigged in favor of the rich and famous. Governments are cutting back on social programs union rights pensioners everything pertaining to the working class while they fill the pockets of the rich. There is no justice its the wild wild west all over again.

[chilli42]

This on top of the LIBOR interest rate fixing case from last year. Also the money laundering support for the drug cartels by HSBC the year before. At least we know who the enemy is.

I am reminded of a post from yesterday on TVF where somone asked for a point of view on FX rates over the next year. We are lambs to the slaughter.

[Jimdandy]

I wonder if anywhere in the ruling a portion of the fine the banks have to pay, if they really ever pay it, will go towards refugee issues like food and shelter and maybe building better rickety boats...

[quandow]

"Prosecutors said traders shared customer orders through chat rooms and used that information to profit at their clients' expenses."

I see fines, and admissions of guilt, but did ANY of this money get back to those clients?

[maidee]

yeah, it is a great time to invest your life savings with those parasites

[SOISABAKA]

What I don't understand is that if the 'system' can police this type of behavior and relegate criminal charges and appropriate fines, why can't they figure out where the "billions of USD in the ISIS Warchest" is and squeeze it dry?

Do they have billions in cash stashed in saddlebags on the backs of camels? Not.