Will Federal Charges Against Five Banks Be Mainly Symbolic?


The Justice Department will announce that Barclays, JP Morgan Chase, Citigroup, and the Royal Bank of Scotland will collectively pay several billion dollars and plead guilty to criminal antitrust violations for rigging the price of foreign currencies, reports the New York Times. Most if not all of the pleas are expected to come from the banks' holding companies. The Justice Department is preparing to resolve accusations of foreign currency misconduct at UBS. Prosecutors are taking the rare step of voiding a 2012 nonprosecution agreement with UBS over the manipulation of benchmark interest rates, citing the bank's foreign currency misconduct as a violation of the earlier agreement. UBS A.G., the banking unit that signed the 2012 nonprosecution agreement, is expected to plead guilty to the earlier charges and pay a fine that could be as high as $500 million rather than go to trial.

The Times reports that, “As much as prosecutors want to punish banks for misdeeds, they are also mindful that too harsh a penalty could imperil banks that are at the heart of the global economy, a balancing act that could produce pleas that are more symbolic than sweeping.” The banks' lawyers are seeking assurances from federal regulators that the banks will not be barred from certain business practices after the guilty pleas. The Securities and Exchange Commission's five members have not yet voted on the requests for waivers, which would allow the banks to conduct business as usual despite being felons.

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