JPMorgan Chase & Co., Citigroup Inc., Barclays Plc and Royal Bank of Scotland Plc (RBS), admitted to guilt in a criminal antitrust charge related to the spot foreign exchange (FX or FOREX) markets. The charges, brought by the US Department of Justice, in a joint charge by US and UK prosecutors alleged the firms conspired to manipulate the price of US dollars and euros exchanged over the FX spot market.
UBS AG pleaded guilty to a different charge while Bank of America Corp received a fine, but did not plead guilty. The total fines related to this global probe into FOREX activities amount to a $6 million penalty.
With JPMorgan, Citigroup, Barclays and Royal Bank of Scotland pleading guilty to felony charges, this marks the first time since the 20th century that a financial institution has pleaded guilty to US criminal charges. The SEC, for instance, has granted waivers to these banks to allow them to continue their usual securities business.
According to JPMorgan's notice, the firm publicly admitted to marking up price quotes while on the phone with clients by using hand signals between traders and salespeople that the customer would not be able to see.
The firm also admitted to earning spreads or markups they should not have earned and admitted to making decisions about whether to fill limit orders based on whether these decisions would be advantageous for the firm and failed to inform clients as to this reason.
The US Department of Justice furthermore deemed the firms' FX trading and sales practices "collusive conduct," "manipulation of LIBOR and other benchmark interest rates," and "withholding supply of or demand for currency and suppressing competition in the FX market." According to one Barclays employee, "if you ain't cheating, you ain't trying."
News Release: Five Major Banks Agree to Parent-Level Guilty Pleas (US Department of Justice)