Forex Scandal

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The Forex Scandal began in 2006 when a Bank of England's FX Joint Standing Committee discussed evidence that "evidence of attempts to move the market around popular fixing times by players that had no particular interest in that fix. It was noted that 'fixing business' generally was becoming increasingly fraught due to this behaviour." [1]. The scandal truly broke however, in June of 2013 when Bloomberg reported that electronic chat rooms were used manipulate Forex benchmarks. The scandal would culminate 5.6 billion dollar fine on 5 banks

Background

Amidst other institutional scandals, notably the LIBOR scandal, it emerged that electronic chat rooms were being used to fix Forex benchmarks. Bloomberg first reported the story in June of 2013, and has manifested into a major international scandal.[2]. Traders would use the chat rooms to move benchmark rates at the same time. This collusion would net the traders profits on their FX trading. The FCA and the US Department of Justice began criminal inquires into the scandal in 2013. The scandal has lead to billions of dollars in fines, as well as guilty pleas from major banks.[3].

Banks Involved in Scandal

The probe into the scandal implicated:

Timeline of Events

In reverse chronological order:

  • May 20th, 2015 Barclays, BoA, RBS, and JP Morgan Chase plead guilty to felony charges and are fined $5.7 billion by U.S. Regulators [4]
  • November 2014, $4.3 Billion of fines were handed down by US, Swiss, and UK regulators [5]
  • September 2014, FCA concludes investigation [6]
  • October 2013, US and UK authorities begin investigations into forex scandal
  • June of 2013, Bloomberg reports that traders used electronic chat rooms to manipulate benchmarks[7]


Table of Fines

Bank Name Total US Fine Total Fines
HSBC $275 Million $618 Million
B.o.A $455 Million $455 Million
Citigroup 1.927 Billion 2.285 Billion
RBS $959 Million 1.303 Billion
JP Morgan $1.552 Billion $1.904 Billion
Barclays $1.937 Billion $2.378 8illion
UBS $835 Million $1.345 Billion
[8]

References

  1. TIMELINE-The FX "fixing" scandal. Reuters.
  2. Barclays handed biggest bank fine in UK history over 'brazen' currency rigging. The Telegraph UK.
  3. Record Fines for Currency Market Fix. BBC.
  4. Record Fines for Currency Market Fix. BBC.
  5. Regulators slap $4.3bn fines on six banks in global forex probe. Financial Times.
  6. Barclays handed biggest bank fine in UK history over 'brazen' currency rigging. The Telegraph UK.
  7. Barclays handed biggest bank fine in UK history over 'brazen' currency rigging. The Telegraph UK.
  8. Bank FX Fine Scorecard. Bloomberg.