Banks face fines of billions because of market manipulation

RBS and other banks face a lawsuit by various funds alleging manipulation of the $5.3 trillion global foreign exchange market that could cost billions of dollars. Probes by regulators worldwide are continuing, and six of 12 implicated banks have settled, agreeing to pay more than $4 billion in fines. Barclays, Citigroup, JPMorgan and RBS are under Justice Department pressure to plead guilty, according to Bloomberg News. JPMorgan and UBS are settling civil suits for $99.5 million and $135 million, respectively.

Citigroup and other banks accused by investors of rigging the foreign exchange market await a decision by a U.S. district court judge on whether the case will be halted pending completion of a Justice Department investigation of the banks' conduct. With investors' blessings, the agency asked the court to put the case on ice for six months to prevent potential interference with its own probe. The request is likely to be approved due to plaintiffs' agreement and the short duration of the freeze.

While cases brought by foreign investors were dismissed, lawsuits by U.S. investment and hedge funds, pension plans and others alleging rigging of the $5.3 trillion global foreign exchange market will move ahead. Citigroup and other banks continue to face what could be billions of dollars in damages. A Jan. 28 court ruling denied defendants' bids to throw out some antitrust claims. Any damages assessed may be based on calculated overcharges from 2003-14, offset by any gains and could be tripled under antitrust law.

UBS's $135 million settlement of a foreign exchange-rigging lawsuit soon may be followed by other accords. UBS is the second bank to settle after JPMorgan, which reached a $99.5 million agreement with investor plaintiffs in January. Defendant banks have been in confidential communications with the judge on the status of settlement talks. The judge agreed March 12 to move the banks' date to answer the complaint to June 16 from March 16, possibly to give the parties time to reach settlements without distraction.
"Plaintiffs in In re Foreign Exchange Benchmark Rates Antitrust Litigation...have reached a settlement with UBS AG, UBS Group AG, and UBS Securities LLC.... UBS will pay $135 million in cash. UBS will also provide the plaintiffs with substantial cooperation; this cooperation will assist in plaintiffs’ prosecution of the litigation against the remaining defendants. The settlement with UBS comes only weeks after the plaintiffs announced a $99.5 million settlement with JPMorgan...."