National News
Ken Sweet, Eric Tucker
The Associated Press
WASHINGTON (AP) —
Four of the world’s biggest
banks agreed Wednesday to
pay more than $5 billion in
penalties and plead guilty to
rigging the currency mar-
kets — a rare instance in
which federal prosecutors
have wrung an admission of
criminal wrongdoing from a
major financial institution.
Traders at JPMorgan
Chase, Citigroup’s banking
unit Citicorp, Barclays and
the Royal Bank of Scotland
were accused of working
together to manipulate rates
on the foreign exchange
market, where hundreds of
billions of dollars and euros
change hands back and
forth.
The penalties are a victory
for the government and
profit at their clients’
expenses. The traders called
themselves “The Cartel,”
and in one of those chat
rooms, a Barclays employee
wrote: “if you aint cheating,
you aint trying,” investiga-
tors said.
The banks will pay a com-
bined $2.5 billion in
criminal penalties for
manipulation of currency
rates between 2007 and
2013. The Federal Reserve
is slapping them with an
additional $1.6 billion in
fines. Finally, Britain’s Bar-
clays is paying an additional
$1.3 billion to British and
U.S. regulators.
A fifth bank, Switzer-
land’s UBS — which was
scrutinized years earlier in a
similar scheme — has
agreed to plead guilty to
manipulating key interest
rates and will pay a separate
admitting any guilt. If any
wrongdoing was acknowl-
edged, it was usually by one
of the bank’s subsidiaries or
divisions, not the overall
company.
An earlier case against
UBS underscores the diffi-
culty of deterring banks
from bad behavior.
In 2012, the bank admit-
ted manipulating interest
rates and signed a non-pros-
ecution agreement with the
Justice Department. But
after it became clear that
UBS was involved in cur-
rency rate manipulation, the
government tore up that
agreement and imposed
new penalties.
“Unlike the other banks,
UBS has a ‘rap sheet’ that
simply cannot be ignored,”
said Leslie Caldwell, head
of the Justice Department’s
criminal division. “Enough
No executives were charged, though that part
of the investigation continues. And the fines,
while large, are a fraction of what the institutions
have made through currency trading over the
past decade
reflect a broader effort by
the Justice Department,
long criticized as reluctant
to prosecute big banks, to
tackle financial misconduct.
In the past 18 months,
prosecutors have brought
criminal cases against banks
accused of tax evasion and
sanctions violations, and
have reached multibillion-
dollar settlements with
several others for their roles
in the 2008 financial melt-
down.
Still, the punishment
announced Wednesday may
have limited practical con-
sequences.
The four banks will be
able to continue to do busi-
ness in the currency
markets. No executives
were charged, though that
part of the investigation
continues. And the fines,
while large, are a fraction of
what the institutions have
made through currency trad-
ing over the past decade.
Prosecutors said traders
shared customer orders
through chat rooms and
used that information to
criminal penalty of $203
million.
“Having to enter into a
guilty plea, at the parent
level by a major financial
institution, is not something
that they enter into lightly,
nor is it something they
enter into with any great joy
in their hearts,” Attorney
General Loretta Lynch said.
All told, including an
agreement announced last
year, the group of banks will
pay nearly $9 billion in
fines for manipulating the
$5.3 trillion currency mar-
ket.
Still, JPMorgan Chase had
$4.1 billion in revenue from
its fixed income and curren-
cies business in the first
quarter of this year alone,
while Citi had $3.48 billion.
It is rare to see a bank
plead guilty to wrongdoing.
Even in the aftermath of the
meltdown, most financial
companies reached “non-
prosecution agreements” or
“deferred
prosecution
agreements” with regula-
tors, agreeing to pay tens of
billions in fines but not
simply is enough.”
UBS said it received par-
tial immunity from the
currency market charges by
being the first bank to report
the corruption to the Justice
Department and cooperate.
Unlike stocks and bonds,
currencies trade nearly 24
hours a day, seven days a
week. The market pauses
two times a day, a moment
known as “the fix.” Traders
in the cartel allegedly
shared client orders with
rivals ahead of the “fix” and
pumped up currency rates to
make profits.
Global companies do
business in multiple curren-
cies and rely on their banks
to give them the closest
thing to an official exchange
rate each day. The banks are
supposed to be looking out
for them. Travelers who
regularly exchange curren-
cies also need to get a fair
price for their euros or dol-
lars.
The number of traders
who took part in the curren-
cy fixing was small.
JPMorgan said it has fired
AP PHOTO/CLIFF OWEN
Banks Fined More than $5 Billion, Plead Guilty
Attorney General loretta lynch speaks as Assistant Attorney General Bill Baer,
Antitrust Division, listens in the background, during a news conference at the
Justice Department in washington, wednesday, May 20, 2015, to announces
that four big banks will pay $2.5 billion in fines and plead guilty to criminally
manipulating global currency market going back to 2007.
one trader. Citi said it dis-
missed nine employees.
Barclays has fired eight
employees tied to “The Car-
tel,” according to New York
regulators.
The banks have agreed to
help prosecutors investigate
individuals who took part in
the rigging.
Sweet contributed to this
report from New York.
Follow Ken Sweet on
Twitter at @kensweet. Eric
Tucker can be followed on
Twitter at @etuckerAP.
Copyright 2015 The Asso-
ciated Press. All rights
reserved. This material may
not be published, broadcast,
rewritten or redistributed.
We honor the many
accomplishments of African
Americans.
It is our primary goal as a
labor union to better the
lives of all people working
in the building trades
through advocacy, civil
demonstration, and the
long-held belief that work-
ers deserve a "family wage" - fair pay for an honest day's work.
A family wage, and the benefits that go with it, not only strength-
ens families, but also allows our communities to become
stronger, more cohesive, and more responsive to their citizens'
needs.
Our family wage agenda reflects our commitment to people
working in the building trades, and to workers everywhere. In this
small way, we are doing our part to help people achieve the
American Dream. This dream that workers can hold dear regard-
less of race, color, national origin, gender, creed, or religious
beliefs.
The Pacific Northwest Regional Council of Carpenters
Representing more than 5.000 construction workers in Oregon State.
Do you want to know more about becoming a
Union carpenter?
May 20, 2015 The Portland and Seattle Skanner Page 9