EU Commission Slaps $1.2 Billion Fine On Five Major Banks For Forex Rigging
European antitrust regulators just issued a collective fine of $1.2 billion to a total of five banks after it found sufficient evidence that they were rigging the spot foreign exchange market for 11 currencies.
The banks involved included Barclays, JP Morgan, MUFG, Royal Bank of Scotland, and Citigroup. Swiss bank UBS was allegedly part of the scheme, but it was exempted from paying the 285 million euro fine given that it was the one who reported the rigging to the European Commission.
During a press release this week, EU Commissioner Margrethe Vestager mentioned that most people depend on banks to make transactions abroad. The amount of money these banks exchange around the world are worth billions of dollars each day.
All of the accused banks apparently colluded with one another to get as much profit as they can from each transaction. Vestager exclaimed that the banks' behavior has undermined the integrity of the sector, which ultimately will negatively affect the economy and the country's consumers.
The European Commission's investigation into the collision and rigging of these banks had started more than six years ago. The agency found out that some executives who were placed in charge of the bank's forex transactions have been sharing sensitive information with one another through online private chat rooms.
According to investigators, the information that was exchanged allowed each individual bank to make informed market decisions like whether or not to sell a particular currency during any given time. The findings further revealed that these traders apparently knew each other personally and were all logged in to the same chat room on Bloomberg terminals. The information they shared included their trading activities and the status of the currencies in their portfolios.
Most of the accused banks have not yet issued responses to the recent finding, but an RBS spokesperson had stated in a recent interview that they were happy to have finally reached a settlement with the European Commission. RBS further stated that the behaviors of the traders involved in the rigging have no place in the banking industry and that the bank condemns the actions of those involved.
Following the news of the European Commission's finding, share prices for the various banks dropped slightly. Barclays and RBS were trading lower, while JP Morgan and Citigroup shares dipped slightly. UBS shares rose up following the news of it being the one that reported the riggings to the EU regulator.
A similar case is currently also ongoing in the United States. The banks involved in the investigation include BNP Paribas, JP Morgan, Citigroup, Barclays, UBS, and the Royal Bank of Scotland. The banks have reportedly been collectively fined $2.8 billion.