'Cartel' Of 4 Big Banks To Plead Guilty To Gaming The Exchange Rate

May 20, 2015
Originally published on May 20, 2015 12:09 pm

Four major banks — Citicorp, JPMorgan Chase, Barclays and the Royal Bank of Scotland — have agreed to plead guilty to currency manipulation and pay over $5 billion in fines. Officials say that traders from the banks, who allegedly called themselves "the cartel," used secret codes to manipulate the exchange rate between U.S. dollars and Euros. Meanwhile, the Justice Department has taken the unusual step of tossing out what's called a deferred prosecution agreement against a fifth bank.

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Four major banks have agreed to plead guilty to currency manipulation. They'll pay more than $5 billion in fines. Federal prosecutors say traders from these banks used secret codes to manipulate U.S. dollar and euro exchange rates. The U.S. Justice Department has also tossed out an earlier plea deal with another bank because it did not live up to a promise to stop deceptive trading. NPR's Jim Zarroli reports.

JIM ZARROLI, BYLINE: The Justice Department says the conspiracy involved traders from Citicorp, JPMorgan Chase, Barclays and the Royal Bank of Scotland. U.S. Attorney General Loretta Lynch says the traders call themselves the cartel.


LORETTA LYNCH: It's perhaps fitting that they chose that name, as it aptly describes the brazenly illegal behavior that they were engaged in on a near five-year basis.

ZARROLI: U.S. officials say the traders used electronic chat rooms and coded language to communicate. They say they would withhold bids or offers that might move the exchange rate in a certain direction, and in this way, they were able to protect each other's trades. Officials say this went on for more than five years. No charges were filed against any of the individuals involved.

U.S. officials also said they were taking action against UBS for manipulating the London Interbank Offered Rate, or LIBOR, which is used to set interest rates all over the world. The Justice Department signed an agreement with UBS in 2012 deferring prosecution if the bank agreed to certain reforms, but officials say even after signing the agreement, UBS engaged in deceptive trading and sales practices. It will pay a fine of $203 million. Jim Zarroli, NPR News. Transcript provided by NPR, Copyright NPR.