Recently, the U.S. Department of Justice announced that five major banks – Barclays, Royal Bank of Scotland, JP Morgan Chase, UBS and Citigroup – will be fined approximately $5.7 billion after pleading guilty to crimes involving the manipulation of global currencies and interest rates.
The Department of Justice noted that the banks plead guilty to antitrust violations in the foreign exchange market, after they allegedly worked together to enhance their profits by manipulating the $5-trillion-a-day foreign exchange market to $10 billion.
It was stated at a press conference that almost every day for more than five years, these banks in this “cartel” communicated through coded language in a private electronic chat room to manipulate the market’s exchange rate between euros and dollars.
“The prices the market sets for those currencies influence virtually every sector of every economy in the world. Their actions inflated the bank’s profits, while harming countless consumers, investors and institutions around the globe.” Says U.S. Attorney General, Loretta Lynch.
Because the banks have admitted guilt in the fraud, this could lead to criminal charges against its employees. Although previously, other bankers have not gone to jail in recent U.S. history for their behavior, we hope to have a different outcome this time. The agreement is also said to involve other “regulatory agencies”.
The banks were fined different amounts for their crimes: Citigroup paid $1.2 billion while JP Morgan will pay $ 892 million. In the case of RBS the fine amounts to $ 669 million and UBS will pay $342 million while Bank of America will pay $205 million.
A very important point to make is that the banks and the authorities have been negotiating this settlement for months after two years of investigations.
The head of the U.S. Justice Department, Loretta Lynch, insisted that this “severe” reprimand should be a “reminder” to any entity operating in Wall Street that “use the financial system in their favor” and “inflate” the benefits of companies while taking advantage of customers and consumers in general.