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Screenshot of a breaking news alert e-mail from Q2 2017
The financial markets regulators may well have concluded their investigations into the six banks that were investigated over a period of one entire year in a global probe into FX rate manipulation by traders within bank FX desks, however whilst the civil penalties equating to $4.3 billion have been served, the criminal prosecutions are now beginning.
In light of this, Royal Bank of Scotland (RBS), one of the largest FX dealers in the world and one of the banks that was implicated by US, Swiss and British regulators for its part in FX benchmark manipulation, has suspended bonus payment for eighteen staff.
The bank was recently fined £400 million by the three regulatory authorities that devoted vast resources toward ensuring that this matter was concluded, and whilst some traders have been suspended or removed from their positions, the bank did retain a substantial proportion of its FX trading personnel.
According to a report by the BBC, Jon Pain, the head of conduct and regulatory affairs at RBS, trust needs to be regained in the bank.
“We are undertaking a robust and thorough review into the actions of the traders that caused this wrongdoing and the management that oversaw it,” he said.
“This is a complicated process but also an essential one in order to identify culpability and accountability for this unacceptable misconduct.
“To be clear, no further bonus payments will be made or unvested bonus awards released to those in scope of the review until it has concluded and its recommendations have been considered,” he added.
Indeed, the forfeiting of bonuses extends further than within the banks themselves, as Martin Wheatley, CEO of the FCA is also set to forego his bonus as a result of a report by Simon Davis, a senior lawyer at prominent British law company Clifford Chance, lambasting the FCA’s recent methods of handling large scale transgressions within the financial services sector.
As a result of the scathing report by Mr. Davis, it is expected that Mr. Wheatley will lose the entirety of his annual bonus, along with four senior colleagues at the FCA, despite the FCA’s action in conjunction with Swiss and US regulators in bringing the six banks which conducted FX rate manipulation to book last month.
In a report last month which accompanied the huge fines, the Financial Conduct Authority (FCA) said the attempts to rig the forex market, by colluding with each other to manipulate the daily setting of “spot” prices for individual currencies, had taken place between 1 January 2008 and 15 October 2013.
With regard to criminal convictions, one individual, thought to be a former RBS forex trader, was arrested by City of London police and Serious Fraud Office staff last Friday, which is set to lead to further arrests as Chancellor of the Exchequer George Osborne has stated that he wishes to make benchmark manipulation by traders a criminal offense.