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Look At The Ludicrous Chat Transcripts Between Traders In Massive Manipulation Probe
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Five major banks — including UBS, the Royal Bank of Scotland, JP Morgan, HSBC, and Citibank — just got slammed with $3.4 billion in fines , following a lengthy probe over accusations that traders had tried to manipulate currency markets.
Authorities in Switzerland, the UK, and, the US were all part of the investigation, which resulted in the biggest set of charges ever levied by British financial regulators.
One regulatory, Britain's Financial Conduct Authority (FCA), said that in a 5-year-period between January 2008 and October 2013, " ineffective controls at the Banks allowed G10 spot FX traders to put their Banks’ interests ahead of those of their clients, other market participants, and the wider UK financial system."
The FCA continued: " These failings allowed traders at those Banks to behave unacceptably. They shared information about clients’ activities which they had been trusted to keep confidential and attempted to manipulate G10 spot FX currency rates, including in collusion with traders at other firms, in a way that could disadvantage those clients and the market."
Such examples of "unacceptable banker behaviour" are captured in chat transcripts among traders and released by the US Commodity Futures Trading Commission as part of its own investigation. We're republish a few instances below, but you can see many more examples here.
In one instance of misconduct below, three traders from Citibank, JPMorgan, and UBS, discuss whether or not to invites a fourth trader ino their private chat room because they aren't sure if they can trust him. At one point, Bank Y tells Bank Z (who presumably knows the fourth trader) that he trusts Bank Z's judgement.
Commodity Future Trading Commision
All of the listed banks co-operated with the investigation. According to the FCA, the fines would have been 30% higher if the banks listed hadn't co-operated with the probe. An investigation into Barclays, one of the large banks notably not mentioned in the list, is still ongoing.
The investigation has resulted in the largest charges ever levied by British financial regulators. Here are how the charges break down:
$1.4 billion in fines from US regulators (the Commodity Futures Trading Commission).
$138 million in fines from the Swiss regulator.
$1.7 billion in fines from UK regulators (the Financial Conduct Authority).
For each bank, this is the combined charge from the three regulators, according to Bloomberg.
UBS: $800 million in fines.
Citigroup: $668 million in fines.
JP Morgan $662 million in fines.
RBS: $634 million in fines.
HSBC: $618 million in fines.
These banks and plenty of others have been reporting that they've set aside hundreds of millions of dollars to prepare for these charges, which have been a long time coming.
Jakub Lichwa at Daiwa Capital Markets warns that it's not all over yet in a note this morning: " In addition, we note that there are 2 further agencies – the US Securities Commission and the Federal Reserve – which have still not announced settlements and therefore the ultimate extent of losses of this FX probe could well be higher depending on the outcome of these investigations."
RBS is the first bank to report that it's reviewing the conduct of some staffers still at the bank: it's got 50 former and current employees under investigation.
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