This is something you don’t see very often: some of the biggest global banks admitting guilt. But today, that’s what we get with five huge banking institutions — including two New York-based giants, Citigroup and J.P. Morgan Chase — agreeing to pay more than $5 billion to settle currency manipulation charges.
Here’s what you need to know:
The bottom line — The Justice Department said the banks engaged in “breathtaking” misconduct when their traders colluded over foreign currency rates from 2007-2013. “These unprecedented figures appropriately reflect the conspiracy’s breathtaking flagrancy, its systemic reach and its significant impact,” Attorney General Loretta Lynch said at a press conference today in Washington, D.C. She described the banks’ actions as a “brazen display of collusion.”
The banks — Citi and Chase were the only two U.S. banks involved. The other three were London-based Barclay’s, Swiss-based UBS, and the Royal Bank of Scotland. All of the banks with the exception of UBS will plead guilty to conspiracy over currency price manipulation. UBS got immunity in the antitrust case because it was the first to report misconduct. Instead, UBS agreed to plead guilty to one count of wire fraud.
The money — In total, the Justice Department is hitting the banks with $2.5 billion in criminal fines while the rest of the more than $5 billion total is being paid in fines. Citi will pay the largest fine of $925 million along with a $325 million penalty. J.P. Morgan will pay a fine of $550 million and a $342 million fine.
The response — The banks in some cases blamed individual traders, who the government did not go after. J.P. Morgan fired one trader while Citi got rid of nine. “The lesson here is that the conduct of a small group of employees, or of even a single employee, can reflect badly on all of us, and have significant ramifications for the entire firm,” said J.P. Morgan Chief Executive James Dimon, according to the Wall Street Journal.