The world’s biggest banks just can’t seem to stay out of trouble. Over the past several years, we’ve seen a variety of scandals and wrongdoings by the world of big finance exposed, including the LIBOR situation and the financial collapse of 2008. Yet, the behavior of the big banks just doesn’t seem to change, because here we are again with another huge fine being handed down by regulators.
Last year, Reuters reported that HSBC, Royal Bank of Scotland, JPMorgan Chase & Co, Citigroup Inc, UBS AG and Bank of America have been levied $4.3 billion in penalties for failing to rein in traders who were manipulating the foreign exchange market. After a year’s worth of investigations, which culminated with the fines actually being handed down by regulators, it was found that traders were swapping confidential client information and coordinating trades in an effort to boost profits. The benchmark that was specifically manipulated was used to value holdings by treasurers and asset managers.
“Today’s record fines mark the gravity of the failings we found, and firms need to take responsibility for putting it right,” Britain’s Financial Conduct Authority CEO Martin Wheatley said. He added that banks need to take responsibility for their employees, and ensure that traders are following the rules. It’s expected that many traders will actually be fired as a result of the investigation, and that many firms will increase automated trading as well. There are also some regulatory changes that are expected to come out of the G20 summit planned for the near future.
While Britain’s regulators handed down the biggest penalty, other regulators are expected to lay down their own fines. Reuters says American regulators are likely to issue a $1.48 billion fine, while Swiss authorities are asking for an additional $139 million.