Banks in Talks to Settle Currency-Rigging Investigations? - Analyst Blog

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According to a Bloomberg report, major global banks have been notified by the regulators that enforcement actions are being planned against them for allegedly rigging the currency rates. At the same time, talks to settle those investigations are also in progress between the banks and the U.S. Federal Reserve and the Office of the Comptroller of the Currency.

The enforcement actions could lead to cease-and-desist orders, penalties or banning of bankers from the industry. Additionally, banks like JPMorgan Chase & Co. ( JPM ), Citigroup Inc. ( C ) and Morgan Stanley ( MS ), among others, have been sent letters outlining the exact finding and a note of caution regarding imminent enforcement actions. The banks have 15 days to reply in defense.

Along with the U.S. regulators, U.K.'s Financial Conduct Authority (FCA) is also involved in settlement talks with major banks including Citigroup, JPMorgan, Barclays PLC ( BCS ), HSBC Holdings plc ( HSBC ), The Royal Bank of Scotland Group plc ( RBS ) and UBS AG ( UBS ).


Regulators across the globe are dealing seriously with the allegations of banks rigging WM/Reuters rates, which are used for determining foreign exchange prices. Also, several banks conducted internal investigations and handed over the findings to the regulators. Based on these internal probes, banks fired/suspended several bankers for their alleged role in rigging WM/Reuters rates.

WM/Reuters rates are published hourly for 160 currencies and half-hourly for the 21 most-traded ones. Hence, it is  a widely accepted standard, the rigging of which will necessarily undermine the importance of the rate and result in negative financial consequences.

The law-enforcement agencies are trying fast-track settlements with the banks in order to avoid lengthy litigations. According to us, this will favor the banks too, as many of them are currently facing several other probes and litigations, thus hampering their financials.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.




This article appears in: Investing , Business , Stocks

Referenced Stocks: FCA , JPM , UBS , MS , BCS

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