US and British regulators fined six major global banks a total of nearly $6 billion between them Wednesday for rigging the foreign exchange market and Libor interest rates.
They said forex traders from the banks had met in an online chatroom brazenly named "the Cartel" to set rates that cheated customers while adding to their own profits in the massive global currencies market.
In the far-flung settlement, Barclays Bank, JPMorgan Chase, Citicorp and the Royal Bank of Scotland all pleaded guilty to US Justice Department charges of conspiring to manipulate the massive currency market.
Switzerland\’s UBS meanwhile pleaded guilty to violating a prior settlement of charges for rigging the Libor interest rate.
And Bank of America was included with the other five in fines levied by the US Federal Reserve in the forex rigging case.
"They acted as partners — rather than competitors — in an effort to push the exchange rate in directions favorable to their banks but detrimental to many others," said US Attorney General Loretta Lynch.
"And their actions inflated the banks\’ profits while harming countless consumers, investors and institutions around the globe."
In Wednesday\’s settlement, the Department of Justice meted out its largest set of antitrust fines ever, assessing $2.5 billion against Barclays, JPMorgan, Citicorp and RBS in the forex case.
Those four, plus UBS and Bank of America, will also pay more than $1.8 billion to the US Federal Reserve over "unsafe and unsound practices" in forex markets.
Barclays, which did not take part in a previous settlement last November with various agencies, was additionally fined more than $1.3 billion by Britain\’s Financial Conduct Authority, the New York State Department of Financial Services, and the US Commodity Futures Trading Commission.
Combined with a $203 billion Justice Department fine for UBS in the Libor case, and other penalties, the total assessed Wednesday was almost $6 billion.
Regulators described a bold scheme by financial heavyweights to orchestrate trades in the $5.3-trillion-per-day global foreign exchange market.
Traders from the banks, communicating via the "Cartel" chat room, agreed to withhold bids or offers for euros or dollars at distinct times to protect each other\’s trading positions, the Justice Department said.
The banks involved represented at least one-fourth of dollar-euro transactions each year and "were uniquely positioned to manipulate the market," said Assistant Attorney General Bill Baer.
A number of traders are facing charges in various countries for their roles in the scheme.
The size of penalties on individual banks ranged from the hundreds of millions of dollars to $2.4 billion for British bank Barclays, depending on a bank\’s involvement in the scheme.
The Barclays sum was high because it had not participated in the November settlement between several banks and the FCA, DFS and CFTC.
Georgina Philippou, the FCA\’s director of enforcement, called Barclays\’ role "another example of a firm allowing unacceptable practices to flourish on the trading floor."
Barclays chief executive Antony Jenkins said he regretted that "some individuals" within the bank "have once more brought our company and industry into disrepute."
"This demonstrates again the importance of our continuing work to build a values-based culture and strengthen our control environment," he said.
Citigroup, which had the second largest total fine of $1.3 billion, called the scandal "an embarrassment to our firm, and stands in stark contrast to Citi\’s values."
Citigroup said it had separately reached an agreement to pay $394 million to settle related private US class action claims.
JPMorgan blamed its role principally on a single trader who has been dismissed.
"The lesson here is that the conduct of a small group of employees, or of even a single employee, can reflect badly on all of us, and have significant ramifications for the entire firm," said JPMorgan chief executive Jamie Dimon.
The Justice Department\’s $203 million fine against UBS, and $60 million levied on Barclays, related to their violating a 2012 settlement for conspiring to rig Libor, the global commercial interest rate benchmark used to peg millions of rate-sensitive contracts and loans around the world.
But, because it offered early cooperation in the forex rigging case, the Swiss bank earned conditional immunity from those charges.