Banks to Pay $3.3 Billion in FX-Manipulation Probe.

http://www.bloomberg.com/news/2014-11-12/banks-to-pay-3-3-billion-in-fx-manipulation-probe.html

Regulators in the U.S., Britain and Switzerland ordered five banks to pay about $3.3 billion in the first wave of penalties since authorities began a global probe into the rigging of key foreign-exchange benchmarks last year.

Switzerland’s UBS AG (UBSN) was ordered to pay the most at $800 million, according to statements from the U.S. Commodity Futures Trading Commission, Britain’s Financial Conduct Authority and the Swiss Financial Market Supervisory Authority. Citigroup Inc. (C) will pay $668 million, followed by JPMorgan Chase & Co. (JPM) at $662 million. Royal Bank of Scotland Group Plc was fined about $634 million and HSBC Holdings Plc (HSBA) $618 million. Barclays Plc (BARC), which had been in settlement talks, said it wasn’t ready for a deal.

Banks and individuals could still face further penalties and litigation following the 13-month probe into allegations dealers at the biggest banks colluded with counterparts at other firms to rig benchmarks used by fund managers to determine what they pay for foreign currency. The U.S. Justice Department and Britain’s Serious Fraud Office are also leading criminal probes into the $5.3 trillion-a-day currency market.

“The traders put their own interest ahead of their customers, they manipulated the market -- or attempted to manipulate the market -- and abused the trust of the public,” FCA Chief Executive Officer Martin Wheatley told reporters at a briefing in London today. The regulator will press firms to review their bonus plans and claw back payments already made.

The U.S. Office of the Comptroller of the Currency may also announce penalties later today and Finma said it has started enforcement proceedings against 11 UBS employees.

Sharing Information

“They shared information about clients’ activities which they had been trusted to keep confidential and attempted to manipulate G-10 spot foreign-exchange currency rates, including in collusion with traders at other firms, in a way that could disadvantage those clients and the market,” the FCA said.

Today’s settlement includes the FCA’s largest-ever fines and marks first time the FCA has entered into a group bank settlement. Previously, the regulator’s largest fine was a 160 million-pound penalty against UBS over the manipulation of the London interbank offered rate in 2012. The FCA announced its formal probe in October 2013, four months after Bloomberg News reported traders colluded to manipulate the WM/Reuters rates.

The fines come more than two years after the first banks settled with U.K. and US authorities over allegations they rigged the London interbank offered rate, a benchmark interest rate used in $300 trillion of securities including swaps and home loans. A dozen firms have so far been fined at least $6.5 billion in investigations related to Libor and its derivatives. UBS was fined about $1.5 billion in that probe.

FCA Chief Executive Officer Martin Wheatley told reporters at a briefing in London today, “The traders put their own interest ahead of their customers, they manipulated the market -- or attempted to manipulate the market -- and abused the trust of the public.”