Five banks fined for manipulation

Citicorp, JP Morgan Chase & Co., and three other global banking giants have agreed to plead guilty to U.S. felony charges for rigging foreign currency exchange rates and pay a total of nearly $5.7 billion in fines as part of settlements announced Wednesday by U.S. and European officials.

The banks, which also include Barclays, the Royal Bank of Scotland, and UBS, "for years participated in a brazen display of collusion," Attorney General Loretta Lynch said.

"The penalty all these banks will now pay is fitting, considering the long-running and egregious nature of their anticompetitive conduct," she said at a news conference in Washington.

"It is commensurate with the pervasive harm done. And it should deter competitors in the future from chasing profits without regard to fairness, to the law or to the public welfare," she said.

The banks agreed to what the Justice Department called three years of "corporate probation" that would include federal court supervision and regular reporting to authorities to determine that the firms had ended "all criminal activity."

The agreements do not prevent the Justice Department from prosecuting executives and other employees at the banks for the illegal activity.

The guilty pleas and fines revolve around rigging foreign currency exchange and, in the case of UBS, for violating the terms of a previous settlement involving manipulation of a key global interest rate known as Libor (London Interbank Offered Rate).

The actions are the latest major financial and reputational hits to major banks as regulators have cracked down on bad behavior since the 2008 financial crisis.

Citicorp, JPMorgan Chase, Barclays, and the Royal Bank of Scotland pleaded guilty to manipulating the price of U.S. dollars and euros traded on the foreign currency exchange spot market from December 2007 to January 2013, the Justice Department said.

Traders at the firms, who described themselves as members of "the Cartel," used electronic chat rooms and code words to manipulate exchange rates "in an effort to increase their profits," the Justice Department said.

"The banks pleading guilty today are not ordinary market participants. They are 'market makers,' representing 25 percent or more of dollar-euro exchange rate transactions each year," Assistant Attorney General Bill Baer said.

"As such, they were uniquely positioned to manipulate the market," he said. "And that is what they did."

The four bank holding companies each agreed to plead guilty to one felony count of conspiring to fix prices and rig bids for foreign currency exchange.

Fines were proportional to each bank's involvement in the conspiracy, which violated antitrust laws, the Justice Department said.

The fines are $925 million for Citicorp; $650 million for Barclays; $550 million for JPMorgan Chase; and $395 million for Royal Bank of Scotland. The Federal Reserve is slapping them with an additional $1.6 billion in fines. Finally, Britain's Barclays is paying an additional $1.3 billion to British and U.S. regulators. A fifth bank, Switzerland's UBS - which was scrutinized years earlier in a similar scheme - has agreed to plead guilty to manipulating key interest rates and will pay a separate criminal penalty of $203 million.

The Citicorp penalty is the largest single antitrust fine in history, Lynch said. And the combined $2.5 billion to be paid by those four banks is the largest set of antitrust fines the Justice Department has ever levied, she said.