Regulators Fine Five Banks for Forex Scandal; Largest Fine Ever Imposed by Authorities

By Steven Hogg - 12 Nov '14 11:10AM

Five major banks including Citibank and JP Morgan were slapped with fines worth $3.4 billion Wednesday, after they were found guilty of failing to monitor traders who rigged foreign currency rates.

The world foreign exchange market is trades in $5.3 trillion every day. Exchange rates are set daily in the Forex market.

Regulators of the U.K., U.S. and Switzerland initiated a probe in mid-2013 and found that many traders of certain banks were rigging the exchange rates to assure their bank made the most profit. The traders kept rigging rates from January 2008 to October 2013 creating code names to refer to clients and also created private chat rooms with pseudonyms like "the players" and "3 musketeers" to trade information, according to Reuters.

However, the regulators nabbed the traders and about 30 of them have either been fired or suspended. The huge fine is perhaps the largest the financial authorities have ever imposed.

Below is the list of banks fined by each regulator:

UK's Financial Conduct Authority (FCA) -

JP Morgan - $352 million

Citibank - $358 million

HSBC - $343 million

RBS - $344 million

UBS - $371 million

The Commodity Futures Trading Commission (CFCA) -

JP Morgan - $310 million

Citibank - $310 million

HSBC - $275 million

UBS - $290 million

RBS - $290 million

Swiss regulator FINMA

UBS - $139 million

Barclays was also supposed to be settling with the regulators but it pulled out at the last minute saying:

"After discussions with other regulators and authorities, we have concluded that it's in the interests of the company to seek a more general coordinated settlement."

"Countless individuals and companies around the world rely on these rates to settle financial contracts, and this reliance is premised on faith in the fundamental integrity of these benchmarks. The market only works if people have confidence that the process of setting these benchmarks is fair, not corrupted by manipulation by some of the biggest banks in the world," Aitan Goelman, CFTC's director of enforcement told USA Today.