FX fix bank fines are in – now the criminal investigations begin


An abrupt end was brought to a milestone investigation into allegations of FX rate fixing among bank traders by North American, British and Swiss financial regulators this week with fines of $3.3 billion having been administered to six banks, however the aftermath of this high profile case is likely to continue.

Whilst the banks, namely Royal Bank of Scotland, HSBC, JP Morgan, Citigroup, Bank of America Corp and UBS, busily engaged in appeasing the regulatory authorities by parting with substantial sums of money, the spotlight is now on the individual traders, the difference being that whilst the banks concerned are settling civil penalties, the traders themselves now find themselves the subject of criminal proceedings.

Quite clearly the British finance ministry has made its mind up to unearth all possible misconduct and prosecute individual employees, as the government department has pledged that it will commit as many resources as necessary in order to obtain criminal prosecutions.

According to a report by Reuters, the finance ministry will hand the anti-fraud agency all the funds it needs in order to conduct such an investigation, with finance minister George Osborne having written to the Serious Fraud Office (SFO) to say it will be given the financial support it needs for the investigation.

“I understand that the SFO is in the early stages of a major investigation into forex trading. Given the importance of this work, the Treasury will provide the required funding for this investigation,” the source said the letter states.

Switzerland’s public prosecutor has followed Britain in commencing criminal proceedings against several bank traders. The investigations which Switzerland is conducting are based on suspicion of “unfaithful financial management”, punishable by up to five years in prison or a fine, and “violation of professional secrecy”, which carries a penalty of up to three years in jail or a fine.

With chat room and instant messanger texts having been recovered by authorities showing traders openly discussing FX rate manipulation, the government authorities likely have a clear picture of the eventual outcome.

The United States handed responsibility for investigating FX rate manipulation to the Federal Bureau of Investigations (FBI) late last year, however the progress made by the law enforcement agency so far has been quiet. With the Commodity Futures Trading Commission (CFTC) having received $1.4 billion in settlements from the six banks concerned, the US government may consider this an admission of being at fault, which in turn could cause the silence kept up by the FBI to be broken shortly.

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FX fix bank fines are in - now the criminal investigations begin

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