Four more banks have agreed to settlements in a massive, two-year long ordeal regarding manipulation of the $5.3 trillion currency market. HSBC, Goldman Sachs, Barclays, and BNP Paribas all signed settlement agreements this week. HSBC agreed on a $285 million settlement, Barclays settled for $375 million, Goldman Sachs is finalizing an agreement estimated to be roughly $129 million, and the BNP Paribas amount was not disclosed. This brings the total settlement amount total accused of trading insider information among other violations in a massive civil suit involving 12 banks to over $2 billion since December, 2014. The suit was filed in late 2013 by law firms Scott&Scott and Hausfeld representing several hedge funds, state pension funds, the city of Philadelphia, and the Oklahoma firefighter’s pension, among other claimants. Bank of America, JP Morgan Chase, and UBS already reached settlements earlier in the year. Remaining defendants include Citigroup, Credit Suisse, Deutsche Bank, Royal of Scotland (RBS), and Morgan Stanley.
In addition to the settlements, fines issued by global regulators including the U.S. Department of Justice and the U.K.’s Financial Conduct Authority have amounted to over $10 billion. For the most part, regulators completed their investigation in May, with the Justice Department originally demanding the banks to plead to criminal charges before eventually negotiating the financial penalties and settlements. Barclays nearly agreed to a settlement in the first wave, but pulled out of the deal before being convinced to join with the other three banks this week. The bank did, however, suspend several traders linked to the investigation. The plaintiffs accuse traders for the banks, which account for over 84 percent of the global currency market, of conspiring since 2003 using internet chat rooms and instant messaging to manipulate the daily closing prices of currency rates. As part of the agreement, none of the settling banks have officially admitted to any wrongdoing. Both waves of settlements, according to the Wall Street Journal, were likely facilitated by Bank of America’s decision in January to agree to a $99.5 million settlement, the first bank to do so.
Despite the majority of banks coming to an agreement in this particular lawsuit and the likelihood that the remaining defendants will eventually follow suit, many of the banks will likely face additional litigation. Both firms representing clients have indicated that additional lawsuits may be forthcoming representing additional jurisdictions, including both firms’ home territory in London. The South Korean Fair Trade Commission is launching a probe into the activities of several of the banks to determine the effect the manipulation had on the country, although some speculate that results of the investigation could take several years. A private lawsuit is being formulated for many Korean companies and traders that were victimized by the manipulation. The South African government has also launched an investigation into the matter. It is likely that more countries and companies will follow suit, and depending on the results, could potentially put the gigantic global industry either in serious jeopardy, or subject it to much more intense global regulation.
Financial Times – Song Jung
Reuters – Neha Dimri
Wall Street Journal – Chiara Albanese