WASHINGTON/NEW YORK, (Reuters) – The $4.3 billion in civil settlements struck yesterday between six global banks and U.S. and U.K. authorities over foreign exchange market manipulation sets the stage for negotiations over related ongoing probes that could bear much more severe consequences.
Citigroup, UBS, HSBC, Royal Bank of Scotland, JPMorgan Chase & Co and Bank of America agreed to make the payment to settle civil claims they failed to stop traders from trying to rig the foreign exchange market.
But the deal did not resolve an advanced criminal probe from the U.S. Justice Department nor an investigation from New York’s powerful banking regulator, Benjamin Lawsky, who has a reputation of helping extract record monetary settlements from global banks.
Sources familiar with the matter say the Justice Department could bring its first criminal charges early next year, and that Lawsky could take action against banks under his jurisdiction ahead of his expected departure, which may come in early 2015.
Wednesday’s deal appears to be the tip of the iceberg when it comes to further legal action, said Josh Rosner, managing director of Graham Fisher & Co, a New York research consultancy. “Did they let anyone off of criminal liability? What was settled?” he said.
Former prosecutors also said criminal authorities have extensive evidence, based upon transcripts released by UK’s Financial Conduct Authority and U.S. civil authorities of traders brazenly discussing attempts to manipulate foreign exchange rates.
“Recordings are typically the strongest evidence you can have,” one former prosecutor said. Another former prosecutor familiar with the probes said he expected that the publicity around the first round of settlements would add momentum to the outstanding investigations.
