Regulators
fine global banks $3.4 billion in forex probe
LONDON/ZURICH (Reuters) - Regulators fined five major
banks $3.4 billion (2.14 billion pounds) for failing to stop traders
from trying to manipulate the foreign exchange market, the first settlement in
a year-long global investigation.
UBS , HSBC and Citigroup , Royal Bank of Scotland and JP Morgan all
face penalties resulting from the probe that has also put the largely
unregulated $5 trillion-a-day market on a tighter leash. One regulator gave
banks a 30 percent discount for settling early.
In the
latest scandal to hit the financial services industry, dealers shared
confidential information about client orders and coordinated trades to make
money from a foreign exchange benchmark used by asset managers and corporate
treasurers to value their holdings. Dozens of traders have been fired or
suspended.
Dealers
used code names to identify clients without naming them and created online
chatrooms with pseudonyms such as "the players", “the 3 musketeers”
and “1 team, 1 dream” in which to swap information. Those not involved were
belittled.
Switzerland's UBS swallowed the biggest
penalty paying $661 million to Britain's Financial Conduct Authority (FCA) and
the U.S. Commodity Futures Trading Commission (CFTC).
A file photo shows the logo
of Swiss bank UBS on a building in Zurich December 19, 2012. REUTERS/Mic …
UBS was also ordered by Swiss regulator
FINMA, which also said it had found serious misconduct in precious metals
trading, to hand over 134 million Swiss francs after failing to investigate a
2010 whistleblower's report.
The
misconduct at the banks stretched back to the previous decade and up until
October 2013, over a year after U.S. and British authorities started punishing
banks for rigging the London interbank offered rate (Libor), an interest rate
benchmark.
RBS, which is 80 percent owned by the British
government, received client complaints about foreign exchange trading as far
back as 2010. The bank said it regretted not responding more quickly to the
complaints. The other banks were similarly apologetic. Their shares were under pressure in European trading.
EXASPERATION
Painted monetary symbols are
seen on a wall in Dublin city centre October 22, 2014. REUTERS/Cathal …
Reflecting exasperation that banks failed to
stop the activity despite pledges to overhaul their culture and controls, the
FCA levied a $1.7 billon fine, the biggest in the history of the City, but gave
a 30 percent discount for early settlement.The FCA also launched a review of the spot FX industry that will require firms to scrutinise trading and compliance and may involve looking at other markets such as derivatives and precious metals.
"Today’s record fines mark the gravity of the failings we found and firms need to take responsibility for putting it right," the FCA's Chief Executive Martin Wheatley said.
"They must make sure their traders do not game the system to boost profits or leave the ethics of their conduct to compliance to worry about."
Barclays
, which had been in settlement talks with both the FCA and the CFTC, made a
"commercial decision" to pull out of the discussions, the FCA said.
Its investigation of the banks continues.
A U.S. dollar sign is seen in
a shop window in Broomfield, Colorado, November 3, 2014. REUTERS/Rick …
The FCA
said its enforcement activities were focused on the five banks plus Barclays,
signalling that Deutsche Bank would not face a fine from it.
Lenders are expecting more penalties,
however, with the U.S. Department of Justice and New York's Department of
Financial Services still investigating the scandal. Britain's Serious Fraud
Office is also investigating and there is the threat of civil litigation from
disgruntled customers.The CFTC, which regulates swaps and futures in the United States, fined the five banks more than $1.4 billion as part of Wednesday's group settlement.
Since 2012 financial firms have been fined nearly $10 billion for rigging market benchmarks.
BANK OF ENGLAND
A reproduction of a U.S. one
thousand dollar bill is seen inside a money exchange bureau in downtown …
The Bank of England said in a separate review
on Wednesday, that its chief foreign exchange dealer, Martin Mallet, had not
alerted his bosses that traders were sharing information.The central bank, whose boss Mark Carney is leading global regulatory efforts to reform financial benchmarks, has dismissed Mallet but said he had not done anything illegal or improper.
It also said it had scrapped regular meetings with London-based chief currency dealers, a sign the BOE wants to put a distance between it and the banks after the scandal.
The
investigation has provoked major changes to the foreign exchange market with a
clamp down on chatrooms, the suspension or firing of more than 30 traders, an
increase in automated trading and new regulatory changes to FX benchmarks which
world leaders are expected to sign at the G20 summit in Brisbane this weekend.
FINMA
has also instructed UBS to limit bonuses for traders of foreign exchange and
precious metals to 200 percent of their base salary for two years.
(Additional
reporting by Steve Slater, Huw Jones, Jamie McGeever, Clare Hutchison and Matt
Scuffham in London and Katharina Bart in Zurich; Writing by Carmel Crimmins,
Editing by Alexander Smith and Anna Willard)
2 comments:
Are you kidding that is chicken feed..... It needs to be 10X's that and some of the AHO's need to be taken outside of their banks and PUBLICALLY HUNG..... China has demonstrated that and their problem with banker appears to have stopped....
3.4 billion is chump change for these big banks when we're talking about hundreds of trillions of bad paper derivatives being held by banksters/investors that bought the junk. Especially since they just create the fiat currencies out of thin air. So, you need 3.4 billion, to pay this fine, just type some numbers into your computers and we're all paid up!. I'm just wondering what will happen to all of the stocks in the stock markets, when the FRN'S that paid for them become worthless after the change to Treasury dollars, which will have value based on gold/silver, etc. Will the stocks, somehow magically be valued in Treasury dollars instead of the crap FRN'S that purchased them.
Post a Comment