Banks Settle with U.K. Regulatory Authority Over Forex Manipulation

Today it was announced that six banks settled with the U.K. Financial Conduct Authority and other regulators for a combined total of approximately $4.3 billion for their roles in the manipulation of the $5.3 trillion-a-day Forex market.  The six banks involved in the settlement include Citigroup, UBS, HSBC, Royal Bank of Scotland, JP Morgan and Bank of America.  While the settlement is larger than fines levied to date in connection with the Libor scandal, this may be just the beginning.  For example, Barclays was not part of these initial settlements and is reportedly still under investigation.  Further, the settlement does not include a settlement with many of the U.S. regulators that are conducting their own investigations, including criminal investigations by the U.S. Department of Justice which will likely involve individuals at the various banks.  The banks that settled today likely wanted to get ahead of the curve to limit their exposure as much as possible.  From the size of the fines, there must have been strong evidence against traders which resulted in the banks considering a settlement at this stage.  Additionally, the banks also face civil litigation in the U.S., which if successful could also present large exposures.

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