JPMorgan and Citigroup are investigated in the U.S. for the manipulation of foreign-exchange rates and the two largest U.S. banks are cooperating with authorities.
“These investigations are in the early stages and the firm is co-operating with the relevant authorities,” reads a quarterly document filed on Friday by the bank with the U.S. Securities and Exchange Commission (SEC).
Citigroup advised that it responds to requests for information from U.S. government agencies and other jurisdictions.
Regulatory authorities in London, Zurich, United States and Asia investigate the foreign-exchange markets after Bloomberg News reported in June that the dealers from the sector have worked together for the manipulation of the rates, carrying out transactions in the 60 second-window when the reference rates are set.
Dealers in London of JPMorgan and Citigroup were put on leave after regulators began investigating the use of instant messaging system over a period of more than three years, said this week sources close to the situation. Credit Suisse and HSBC have launched internal probes according to sources close to these matters.
Barclays has suspended six traders in the forex market, including a chief dealer in London. Royal Bank of Scotland Group PLc., Deutsche Bank and UBS AG, also part of the group suspected of manipulating the forex markets confirmed that they were working with regulators during the investigations on the foreign-exchange market, a $5.3 trillion market a day.
“We can confirm that we are conducting investigations alongside a number of other agencies both in the UK and abroad into a number of firms relating to trading on the foreign exchange (forex) market,” said a spokesman for the UK’s Financial Conduct Authority (FCA).
Banks set aside billions of dollars in litigation costs: Citigroup said that its litigation costs are $5 billion and Bank of America set aside $5.1 billion for litigation costs.
JP Morgan lost last year $6 billion in trading credit derivatives in what was called the “London Whale” incident.
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