The Swiss Competition Commission (known as WEKO) announced today, March 31st, that it was investigating eight global banks regarding possible manipulation of foreign exchange rates, and for the first time named the financial institutions. The list of banks involved in the Swiss forex probe includes UBS AG (NYSE:UBS) and Credit Suisse Group AG (ADR) (NYSE:CS), along with Zurich Cantonal Bank, Julius Baer Gruppe AG (VTX:BAER) (OTCMKTS:JBARF) and JPMorgan Chase & Co. (NYSE:JPM), Citigroup Inc (NYSE:C), Barclays PLC (NYSE:BCS) (LON:BARC) and Royal Bank of Scotland Group plc (ADR) (NYSE:RBS) (LON:RBS).
Today’s developments are just the latest in the ongoing international forex investigation. Regulators in other European countries, the U.S. and Singapore began investigations into possible foreign exchange manipulation several months ago, and rumors have swirled about which institutions were involved since then.
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This scandal threatens to become even more serious than the rigging of the “Libor” rate scandal, which was just recently settled and resulted in billions in fines against those involved. Analysts point out that since the forex probe involves the integrity of the entire foreign exchange market, rather than just a single rate, it will likely have more serious repercussions.
Statement from WEKO about Forex manipulation
“There are indications that competition agreements for the manipulation of exchange rates have been made in Forex trading between banks,” WEKO elaborated in its statement.
The alleged manipulation, the statement read, involved the illegal exchange of confidential information, undertaking transactions with other market participants at pre-agreed prices and other coordinated activities to “fix” a forex benchmark.
“Based on the information currently available to the competition commission, authorities believe that the most important currencies are affected,” the statement continued, adding that the commission “cannot exclude” the possibility other banks or brokers may have been involved.
Credit Suisse response
Credit Suisse Group AG (ADR) (NYSE:CS) released a statement saying the company was “astonished’ by the allegations, and pointed out it had not been a part of WEKO’s preliminary investigation into various banks.
“The press release contains incorrect references to Credit Suisse AG and these allegations are both inappropriate and harmful to our reputation,” the Zurich-based financial behemoth said in reply the commission’s statement. The statement continued to say, however, that the company was cooperating fully with the investigation in order to clear its name as expeditiously as possible.