US and Brussels target at least 12 banks over forex

Six banks agreed a $4.3bn settlement with UK, US and Swiss regulators on Wednesday for allegedly attempting to

manipulate the foreign exchange market. But for them and at least half a dozen other banks and their legal and public relations, the exposure is far from over as US and European investigators continue to pursue cases.

The US Department of Justice is investigating numerous banks, former traders and salesmen for allegedly manipulating the $5.3tn forex market and overcharging customers, while evidence obtained by Europe’s top competition authority, people close to the probe said, is of “startling quality”.

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The investigations, which are expected to play out over the next year or longer, will probably result in large fines and criminal findings from the DoJ, these people say.

If history is any guide, banks can look to settlements that resolved allegations that financial institutions manipulated Libor and other benchmark interest rates. The DoJ collected $1.2bn in fines and admissions of wrongdoing from UBS, Royal Bank of Scotland, Barclays, Rabobank, and Lloyds in settlements. That was part of a total $4bn in fines by US, UK and other national regulators.

The European Commission can levy fines of up to 10 per cent of a company’s global turnover and has hit banks with €1.8bn in fines connected to Libor and Euribor.

“The US Justice Department’s Criminal and Antitrust Divisions have an active, ongoing investigation into possible manipulation of foreign exchange rates,” a DoJ spokesman said on Wednesday, declining further comment. The Federal Reserve said it was “continuing to investigate in the foreign exchange markets in co-ordination with other authorities, including the Department of Justice”.

JPMorgan Chase, Citigroup, Deutsche Bank , Barclays and UBS have each disclosed criminal investigations by the DoJ.

The DoJ had been in negotiations with UBS but those talks have slowed and a settlement is not expected until next year, according to one person familiar with the matter. It is possible the DoJ reaches a deal with another bank, possibly a US one, before then although it increasingly seems likely there will not be a deal until next year, a person familiar with the matter said.

US bank fines: get the data

Stacks of U.S. $100 bills are arranged for a photograph in New York, U.S., on Thursday, Feb. 7, 2013. The U.S. dollar advanced in trading today to the highest in almost three weeks against a basket of major currencies. Photographer: Scott Eells/Bloomberg

Banks have paid more than $100bn in legal settlements with US regulators since the financial crisis, data compiled by FT reporters shows.

In an attempt for leniency, banks have been queueing up to give the European Commission information. In the case of Libor, UBS avoided a €2.5bn penalty by winning immunity.

The idea of the global settlement began over the summer when banks approached the UK’s Financial Conduct Authority for a one-shot deal. Part of their argument was they wanted the negative headlines to be shared out across the banking sector.

It was a strategy that carried risk. Barclays pulled out of the UK-US settlement on Tuesday night after New York’s Department of Financial Services, its New York regulator, said it would not participate in the deal. The UK bank said on Wednesday it preferred a settlement with all of its regulators over a piecemeal approach.

The DFS is investigating about a dozen banks for possible forex manipulation and installed monitors at Barclays and Deutsche Bank as part of that probe. Standard Chartered is one of the banks being investigated.

Full Article: http://www.ft.com/intl/cms/s/0/3f33027a-6b51-11e4-9337-00144feabdc0...

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