The U.S. Commodity Futures Trading Commission joined U.K. and Swiss regulators in fining five banks for trying to rig foreign exchange markets Wednesday, imposing $1.4 billion in penalties on the banks for manipulating a rate used to settle financial contracts.
“Countless individuals and companies around the world rely on these rates to settle financial contracts, and this reliance is premised on faith in the fundamental integrity of these benchmarks,” said CFTC Director of Enforcement Aitan Goelman. “The market only works if people have confidence that the process of setting these benchmarks is fair, not corrupted by manipulation by some of the biggest banks in the world.”
The CFTC is imposing fines of $310 million each on Citibank and JPMorgan Chase, $290 million each on the Royal Bank of Scotland and UBS, and $275 million on HSBC.
UK authorities also fined the banks about $1.7 billion collectively.
The CFTC accused the banks of conspiring to manipulate a key rate used in foreign exchange markets to establish the relative values of currencies from 2009 to 2012.
Traders used private chat rooms to coordinate strategies for manipulating the rate, the CTFC said, sharing confidential customer information and their own trading positions.
The CFTC also faulted bank management for failing to control the traders engaged in the manipulation, although it acknowledged the cooperation of all the banks in its investigation, which it has been conducting for over a year.
It was not yet clear whether further penalties or lawsuits would be forthcoming from the other U.S. law enforcement and financial regulatory agencies that worked with the CFTC in the investigation, including the Department of Justice.
Some of the illicit foreign exchanges’ moves, the CFTC noted, took place during the same time that the banks were on notice for an investigation into manipulation of the London Interbank Offered Rate, an important interest rate benchmark. In that high-profile case, UBS paid U.S. authorities $1.2 billion in 2012 over its conduct.
