JPMorgan Chase, Citigroup first U.S. banks to be fined in rate-rigging scandal
On Wednesday, JPMorgan Chase and Citigroup became the first U.S. banks fined for the alleged manipulation of benchmark interest rates that affect hundreds of billions of dollars in contracts around the world, including credit cards and mortgages.
The European Commission slapped six financial giants, including Deutsche Bank and Royal Bank of Scotland, with $2.3 billion total in penalties for allegedly colluding to rig European and Japanese interest rates for profit.
The commission, the executive arm of the European Union, is one of several regulators around the world examining the manipulation of key interest rates such as the London interbank offered rate, known as Libor.
In the United States, the Commodity Futures Trading Commission has penalized four European banks — RBS, Barclays, UBS and Rabobank — for their role in the scheme, but the agency, along with the Justice Department, is investigating domestic banks.
Each of the cases that have been settled so far revealed a corporate culture in which traders bragged about the plots in e-mails and Internet chat rooms. Authorities say the latest cases illustrate more of the same brazen disregard for the law.
Between 2005 and 2008, traders at the banks conferred on data submissions for the calculation of the Euro Interbank offered rate, or Euribor, as well as their trading and pricing strategies, the commission said. A similar scheme was afoot in Japan, where traders at many of the same banks conspired to manipulate rates to benefit their bottom line from 2007 to 2010.continue reading »