Tags: Banks | Foreign Currency | JPMorgan Chase | Citigroup

US Pushes Four Banks to Plead Guilty in Currency Probe, NYT Says

Tuesday, 10 February 2015 08:28 AM

The U.S. Justice Department is pressing banks including JPMorgan Chase & Co. and Citigroup Inc. to plead guilty to criminal charges to resolve probes into currency manipulation, the New York Times reported, citing unidentified lawyers briefed on the matter.

Federal prosecutors told JPMorgan, Citigroup, Barclays Plc and Royal Bank of Scotland Group Plc that they must enter guilty pleas to settle the cases, the newspaper reported Monday night in New York. Spokesmen for the Justice Department and banks declined to comment on the talks or didn’t respond to messages seeking comment, in almost all cases outside business hours.

The criminal investigations stem from probes on three continents into whether dealers at the world’s biggest banks traded ahead of clients and colluded to rig benchmarks used by pension funds and money managers to determine what they pay for foreign currencies. While U.S. prosecutors for years refrained from forcing banks to plead guilty to crimes because of concern it might hurt clients or the financial system, authorities were emboldened last year after wresting such admissions from two big European lenders without setting off turmoil.

Negotiations are likely to center on whether banks’ parent companies or their units plead guilty, with banks preferring that their subsidiaries take the fall, arguing that wrongdoing was isolated to midlevel employees, the New York Times reported. The lenders will probably want assurances that guilty pleas won’t lead to revocations of licenses or cost them major business lines, it said.

Lawsky’s Investigation

New York’s banking regulator, conducting a related probe, found evidence Barclays and Deutsche Bank AG may have used algorithms on their electronic trading platforms to manipulate exchange rates, a person with knowledge of the case told Bloomberg News in December. That investigation, led by New York Department of Financial Services Superintendent Benjamin Lawsky, has expanded, a person with knowledge of the case said late Monday in New York.

Lawsky’s office sent subpoenas to Goldman Sachs Group Inc., BNP Paribas SA, Credit Suisse Group AG and Societe Generale SA as part of an effort to examine practices at firms across the market, the person said, asking not to be identified because the inquiries are confidential. The requests for information don’t necessarily indicate the four banks are believed to have done anything wrong, the person said.

The New York Times reported the subpoenas late Monday. Spokesmen for the four banks declined to comment or didn’t respond to messages seeking comment outside business hours.

Multibank Talks

The Justice Department and banks may yet take weeks or months to negotiate deals, the newspaper said.

Last year six banks were fined $4.3 billion by regulators who found that traders colluded to rig currency benchmarks and boost their own profits at the expense of pensioners, investors, companies and ordinary citizens. Citigroup was fined more than $1 billion by U.K. and U.S. authorities, the stiffest penalty. Barclays withdrew on the eve of that settlement and continued negotiations with regulators.

U.S. prosecutors have been seeking to settle their criminal currency-rigging cases with multiple banks at the same time, letting lenders avoid being singled out for industrywide conduct, a person familiar with the situation said in November.

Holder’s Remarks

Attorney General Eric Holder, who plans to step down this year, said that month the department was getting closer to announcing civil and criminal resolutions in the currency probe. He has signaled charges against individual traders also are coming.

The Justice Department assumed a more aggressive stance on prosecuting big banks amid criticism from U.S. lawmakers over a lack of such charges in the wake of 2008’s global credit crisis.

In May, a subsidiary of Zurich-based Credit Suisse Group AG became the first global bank in more than a decade to plead guilty in a U.S. courtroom, agreeing to pay $2.6 billion in penalties for helping Americans cheat on their taxes.

About two months later, BNP Paribas pleaded guilty in Manhattan federal court to violating U.S. sanctions by processing banned transactions involving Sudan, Iran and Cuba. The bank, France’s biggest, agreed to pay a record $8.97 billion to resolve state and federal probes.

Before 2014, the last global bank to plead guilty in the U.S. was Credit Lyonnais, which admitted in January 2004 it made false statements to the Federal Reserve.

© Copyright 2020 Bloomberg News. All rights reserved.

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The U.S. Justice Department is pressing banks including JPMorgan Chase Co. and Citigroup Inc. to plead guilty to criminal charges to resolve probes into currency manipulation, the New York Times reported.
Banks, Foreign Currency, JPMorgan Chase, Citigroup
Tuesday, 10 February 2015 08:28 AM
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