Settlements By Large Banks In Currency Manipulation Near $2 Bil

By Mani
Updated on

HSBC, Barclays, BNP Paribas and Goldman Sachs are said to have recently signed agreements to settle allegations that their traders manipulated the currency market. With the latest announcement, the total amount paid by banks is now just less than $2 billion.

Large banks manipulating currency markets

As reported by ValueWalk, a number of investors including hedge funds, public pension funds and the city of Philadelphia filed an antitrust lawsuit against a dozen banks including JPMorgan, Bank of America, Goldman Sachs, Barclays, Deutsche Bank and Morgan Stanley among others.

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Last January, JPMorgan became the first bank to settle the foreign currency manipulation charges. Market observers believed that the bank’s move could add pressure to its peers facing similar allegations.

Citing people familiar with the developments, The Wall Street Journal reported Wednesday that HSBC, Barclays, BNP Paribas and Goldman Sachs have recently signed agreements to settle their cases. Some of the people indicated that HSBC agreed to pay $285 million and Barclays $375 million. Though it was unclear how much BNP has agreed to pay, Goldman Sachs was reportedly in advanced settlement discussion for $129.5 million.

The deal is subject to approval by U.S. authorities, notably by U.S. District Judge Lorna Schofield in New York, in whose court the lawsuit was filed. A hearing is scheduled on June 25th.

In the lawsuit filed in late 2013, it was alleged that bank traders improperly shared confidential information about their clients’ orders through electronic chat rooms to unfairly manipulate the $5.3 trillion currency market.

According to the lawsuit, the 12 banks held an 84% global market share in currency trading, and were counterparties in 98% of U.S. spot volume.

Interestingly, none of the banks has admitted to the alleged rigging of the currency market.

Three large banks yet to agree to a settlement

However, three of the banks – Deutsche Bank, Credit Suisse, and Morgan Stanley – have still not agreed to a civil settlement. Following JPMorgan’s settlement last January, negotiations with other banks are said to have accelerated. The U.S. bank disclosed to the plaintiff’s lawyers documentation it had already shared with U.S. and European regulators regarding the trading data related to the alleged manipulation.

The reported civil settlement follow $10 billion in bank fines after a years-long investigation into the foreign exchange market by many global regulators including the U.S. Department of Justice and the U.K’s Financial Conduct Authority. According to a person familiar with the matter, the banks are likely to witness similar civil claims in other jurisdictions such as London.

Last month, nearly $6 billion in fines were levied against six major banks by U.S. and British regulators, including Barclays, JP Morgan Chase, UBS, Citicorp, for rigging foreign exchange market and Libor interest rates. UBS, meanwhile, pleaded guilty to violating a prior settlement of charges relating to rigging the Libor interest rate.

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