WASHINGTON—Five global banks have agreed to pay more
than $5 billion in combined penalties and will plead guilty to
criminal charges to resolve a long running U.S. investigation into
whether traders at the banks colluded to move foreign currency
rates in directions to benefit their own positions.
Four of the banks, J.P. Morgan Chase & Co., Barclays PLC,
Royal Bank of Scotland Group PLC, and Citigroup Inc., will plead
guilty to conspiring to manipulate the price of U.S. dollars and
euros, authorities said.
The fifth bank, UBS AG, received immunity in the antitrust case,
but will plead guilty to manipulating the Libor benchmark after
prosecutors said the bank violated an earlier accord meant to
resolve those allegations of misconduct. UBS will also pay an
additional Libor-related fine.
The banks will pay a combined $5.6 billion to various state,
U.S. and U.K. authorities to resolve the foreign exchange and Libor
probes.
Bank of America Corp. will also pay a $205 million penalty to
the Fed to resolve the regulator's foreign exchange probe. Bank of
America didn't face similar action from the Justice Department.
The fines, which include penalties from the Federal Reserve and
other regulators, come on top of a combined $4.3 billion many of
the same banks paid in November to resolve similar charges from
U.S. and U.K. regulators.
Authorities said euro dollar traders at the banks, who were
self-described members of "The Cartel" communicated through coded
language in an online chat room to coordinate attempts to move
rates set at 1:15 and 4 p.m.
The traders would withhold bids or offers to avoid moving the
rate in directions that would hurt open positions held by other
members of the group, in violation of antitrust laws, prosecutors
said.
No traders have yet been criminally charged over the conduct,
but New York's financial regulator said it required Barclays to
fire eight employees in connection with the resolution.
Investigations into individuals are continuing, according to
government officials.
Lawyers for the banks are expected to enter a series of pleas in
federal court in Connecticut later on Wednesday.
Citigroup, which was accused of being involved in the misconduct
from December 2007 through January 2013, is paying the largest
criminal fine of $925 million. The other banks were accused of
engaging in the conduct for various periods with that time
frame.
"The behavior that resulted in the settlements we announced
today is an embarrassment to our firm, and stands in stark contrast
to Citi's values," Chief Executive Michael Corbat said in a news
release, adding its internal investigation has so far resulted in
nine terminations.
The New York bank noted the settlements are covered by its
existing legal reserves and won't require a charge to earnings in
the second quarter.
J.P. Morgan executives made similar comments in the wake of the
settlement. The bank said the conduct underlying the antitrust
charge is principally attributable to a single trader, who has
since been dismissed, and his coordination with traders at other
firms.
Under its settlement with the Justice Department, J.P. Morgan
will pay a fine of $550 million, while the Fed penalty is $342
million. The bank has previously reserved for the settlements.
One bank, Barclays, pulled out at the last minute of the
November settlement with regulators, and is now paying around $2
billion to the Department of Justice, the Federal Reserve, the
Commodity Futures Trading Commission, the New York State Department
of Financial Services, and the U.K. Financial Conduct
Authority.
It also agreed that its foreign exchange trading and sales
practices violated its 2012 Libor agreement, and agreed to pay an
additional $60 million penalty.
Prosecutors said UBS would plead guilty in connection with
similar violations. They said UBS engaged in deceptive foreign
exchange trading and sales practices after its 2012 agreement,
including by adding undisclosed markups to certain customers'
transactions in which traders and sales staff told customers there
were no markups added.
One UBS trader also engaged in the same collusive behavior in
the euro and dollar market, but the bank wasn't charged over that
conduct because it had obtained immunity by being the first bank to
report the possible antitrust violations.
The five banks will be under a three-year period of probation,
overseen by the court.
Write to Aruna Viswanatha at aruna.viswanatha@wsj.com
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