Six major global banks in the U.S. and England were fined a total of $6 billion by U.S. and British regulators Wednesday after pleading guilty to rigging the $5 trillion a day foreign exchange markets and Libor interest rates.
Barclays Bank, JPMorgan Chase, Citicorp, the Bank of America and the Royal Bank of Scotland reached the settlement with the U.S. Justice Department on charges of conspiring to manipulate the mammoth currency market.
Switzerland's UBS pleaded guilty separately to violating a prior settlement of penalties for rigging the Libor interest rate.
"The penalty all these banks will now pay is fitting, considering the long-running and egregious nature of their anticompetitive conduct," said U.S. Attorney General Loretta Lynch at a news conference in Washington. "They acted as partners -- rather than competitors -- in an effort to push the exchange rate in directions favorable to their banks but detrimental to many others," continued Lynch.
The settlements on Wednesday was the largest set of antitrust fines the U.S. Department of Justice has ever meted out. On top of the $6 billion, the six banks will also have to pay more than $1.8 billion to the US Federal Reserve for "unsafe and unsound practices" in Forex markets.
"?Chartel"
In describing the scheme carried out by the banks, regulators point to an orchestrated "?Chartel" chat room where "?invited" traders from the banks agreed to withhold bids or offers in euros or dollars at specific times in order to protect each other's trading positions. In an effort to boost their own profits, the banks used coded language to coordinate the trades.
According to Assistant Attorney General Bill Baer, the banks represented at least one-fourth of dollar-euro transactions each year and "were uniquely positioned to manipulate the market."
To bring home the severity of their actions, the Justice Department is obligating Citigroup's main banking unit Citicorp and the parents of JPMorgan, Barclays and Royal Bank of Scotland to plead guilty to U.S. criminal charges, an action not implemented for more than several decades.
The investigations are ongoing and a number of individual traders accused of cooperating with the banks face charges in other countries.