EU fines banks over $1 billion over foreign exchange cartel

Galtero Lara
May 18, 2019

Citigroup Inc., Royal Bank of Scotland Group Plc, and JPMorgan Chase & Co. are among five banks that have agreed to pay European Union (EU) fines of about 1.07 billion euros ($1.2 billion) for colluding on foreign-exchange trading strategies.

More than a dozen financial institutions have paid about $11.8 billion (€10.5 billion) in fines and penalties globally, with another $2.3 billion spent to compensate customers and investors.

"For example, one chatroom was called Essex Express "n the Jimmy because all the traders but 'James" lived in Essex and met on a train to London".

The three way banana split infringement involved communications in three chat rooms - three way banana split, two and a half men and only Marge - among traders from UBS, Barclays, RBS, Citigroup and JPMorgan between December 2007 and January 2013.

A sixth bank, UBS, was excused financial penalties for revealing the cartels' existence.

RBS said it had made changes to its controls.

"Today's fine is a further reminder of how badly the bank lost its way in the past and we absolutely condemn the behaviour of those responsible", RBS said in an emailed statement.

MUFG is "committed to ensuring integrity and compliance with the regulatory authorities in every jurisdiction in which we operate, and have taken a number of measures to prevent this occurring again", the bank said in a statement.

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Citigroup and Barclays declined to comment.

The first decision imposed a total fine of €811.2m on Barclays, RBS, Citigroup and JP Morgan in relation to a case referred to as the "Forex - Three Way Banana Split" cartel.

Groups of traders from banks including Barclays and Royal Bank of Scotland (RBS) worked together in secret online chatrooms to deceive the markets.

Forex spot order transactions are meant to be executed on the same day at the prevailing exchange rate.

Five major banks have been slapped with a 1.07 billion euro (£930 million) fine after cartels of dodgy traders, including one dubbed the "Essex Express", rigged foreign exchange markets.

Litigators have always been hoping to replicate in Britain the success of US class action claims against banks such as Goldman Sachs, HSBC and Barclays, that have yielded more than $2 billion for investors in settlements.

Scott & Scott, a US law firm that has set up shop in Britain after its success in the USA, where it was lead counsel in the action against 15 banks, said it had been waiting for the European Commission penalties.

"Our firm will be working to recoup losses suffered by non-U.S. pension funds, asset managers, insurance companies and multinational corporations, among others, as a result of the banks' wrongdoing", London-based partner Belinda Hollway said.

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