FX manipulation settlement scheduled for May

FX Manip

A large settlement has been scheduled for May to resolve allegations that JPMorgan Chase, UBS, Barclays, Citigroup and RBS manipulated their foreign exchange markets.

The US Department of Justice (DoJ) has demanded that each institution pay $1 billion and plead guilty to these criminal charges. The DoJ would ideally like to close all five cases at the same time but it is unclear at the moment if the department can meet this goal.

Resolving these issues would be another step in Wall Street’s efforts to move forward from the scandal which led to billions of dollars in penalties. In order for these banks to continue operating, they will require waivers from the Securities and Exchange Commission and Department of Labour.

However, part of Barclays’ involvement in the settlement depends on whether the algorithms in the bank’s forex trading platform will be scrutinised and if that issue is not taken into consideration, Barclays will be excluded from the settlement.

Trading algorithms at Deutsche Bank are also being looked into, but the German lender is not part of this settlement.

The case has also been complicated for UBS due to disagreements over how much credit a bank should receive for being the first to disclose FX information. UBS had initially assumed that they would have immunity through the antitrust probe, but the investigation has since grown and regulators are questioning Wall Street groups about whether they adequately disclose information about currency products and profits to investors and counterparties.

There is however, a possibility that those who do come forward with information and cooperate with authorities will be given immunity by the probe being conducted by the DoJ fraud division.

Last November, six banks including JPMorgan, Citigroup, UBS and RBS agreed to pay $4.3 billion to authorities in the US, UK and Switzerland in the first settlements announced in the initial FX investigation which did not involve the DoJ.

 

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