The biggest banks in the world have been under intense scrutiny ever since the financial crisis. During that period, almost all the big banks have been exposed for a range of misdemeanors. In a new development, five of the best-known banks in the world have been found guilty of having fixed the foreign exchange market.
They behaved in the manner of a cartel to make big profits on the back of their manipulation. The competition commission of the European Union found the banks guilty of manipulating the foreign exchange market and slapped a fine in excess of 1 billion Euros.
Over the years, some of the biggest banks in the world have been found guilty of engaging in illegal practices. In the latest instance, Barclays, Mitsubishi UFJ Financial Group (MUFG), Royal Bank of Scotland, Citigroup and J.P. Morgan have been found guilty of rigging the foreign exchange market. It is a large source of revenue for large banks and by rigging a market that is worth trillions, they must have made handsome returns.
The five banks formed two separate groups and manipulated as many as 11 currencies from across the world. According to reports, the currencies involved some of the world’s most liquid currencies. They included the US Dollar, the Euro, and the British Pound. Accordingly, the EU’s competition commission imposed a fine of 1 billion Euros on the banks in question.
While foreign currency traders might be working at different banks, they are often in contact with one another and it has emerged that traders from among these banks had unofficial chat rooms where they passed information to each other.
One of those chat rooms, which was active from 2007 through to 2013, included traders from Citigroup, J.P. Morgan, Barclays, UBS and Royal Bank of Scotland. The other one was active from 2009 to 2012 and included traders from UBS, Royal Bank of Scotland, MUFG and UBS. The first cartel was fined 811.2 million Euros. Citigroup was slapped with the highest fine of 310.8 million Euros. The second cartel was fined 257.7 million Euros. Barclays ended up with the biggest fine of 94.2 million Euros.