The Federal Reserve Board has announced the imposition of fines against six major banking organizations (UBS AG, Barclays Bank PLC, Citigroup Inc., JPMorgan Chase & Co., Royal Bank of Scotland PLC and Bank of America Corporation) for unsafe and unsound practices in the foreign exchange markets. The Federal Reserve Board found that as a result of deficient policies and procedures governing the banks’ internal controls and oversight over foreign exchange practices, the organizations failed to detect and address improper actions by their traders. Such actions included the disclosure in electronic chatrooms of confidential customer information to traders at other organizations as well as illegal agreements among traders to manipulate benchmark currency prices. Among other things, the cease and desist order issued by the Federal Reserve Board requires the firms to improve their policies and procedures for oversight and controls over activities in the foreign exchange markets, including the wholesale foreign exchange and similar types of markets.
The Federal Reserve Board action is taken concurrently with the US Department of Justice’s criminal charges against five of the same organizations (excluding Bank of America Corporation) relating to misconduct in the foreign exchange markets. In addition, the Connecticut Department of Banking has joined the cease and desist provisions of the Federal Reserve Board’s action against UBS, and the New York Department of Financial Services has taken a separate action against Barclays and its New York branch based on allegations of similar foreign exchange-related misconduct.
The Federal Reserve Board’s press release is available at: http://www.federalreserve.gov/newsevents/press/enforcement/20150520a.htm.
The Federal Reserve Board’s order against UBS AG is available at: http://www.federalreserve.gov/newsevents/press/enforcement/enf20150520a6.pdf.
The Federal Reserve Board’s order against Barclays Bank plc is available at: http://www.federalreserve.gov/newsevents/press/enforcement/enf20150520a3.pdf.
The Federal Reserve Board’s order against Citigroup Inc. is available at: http://www.federalreserve.gov/newsevents/press/enforcement/enf20150520a5.pdf.
The Federal Reserve Board’s order against JPMorgan Chase & Co. is available at: http://www.federalreserve.gov/newsevents/press/enforcement/enf20150520a2.pdf.
The Federal Reserve Board’s order against Royal Bank of Scotland plc is available at: http://www.federalreserve.gov/newsevents/press/enforcement/enf20150520a4.pdf.
The Federal Reserve Board’s order against Bank of America Corporation is available at: http://www.federalreserve.gov/newsevents/press/enforcement/enf20150520a1.pdf.