Four of the world’s biggest banks agreed Wednesday to pay more than $5 billion in penalties and plead guilty to rigging the currency markets — a rare instance in which federal prosecutors have wrung an admission of criminal wrongdoing from a major financial institution.
Traders at JPMorgan Chase, Citigroup, Barclays and the Royal Bank of Scotland were accused of conspiring among themselves to manipulate rates on the foreign exchange market, where hundreds of billions of dollars and euro change hands back and forth.
The penalties are a victory for the government and reflect a broader effort by the Justice Department, long criticized as reluctant to prosecute big banks, to tackle financial misconduct.
In the past 12 months, prosecutors have brought criminal cases against banks accused of tax evasion and sanctions violations, and have sued others for their roles in the 2008 financial meltdown.
Still, the punishment may have limited practical consequences, and it’s far from clear it will deter misconduct by others.
The four banks will continue to do business in the currency markets. No executives were charged, although that part of the investigation continues. And the fines, while large, are a fraction of what the institutions made during the past decade.
Prosecutors say traders shared customer orders and used that information to profit at their clients’ expenses.
The banks will pay a combined $2.5 billion in penalties for manipulation of currency rates between 2007 and 2013. The Federal Reserve is slapping them with an additional $1.6 billion in fines. Barclays is paying an additional $1.3 billion to British and U.S. regulators.
