Four banks, including Citigroup and JP Morgan, admit guilt in forex manipulation probe

Four major banks pleaded guilty Wednesday  to trying to manipulate foreign exchange rates and six banks were fined a total of nearly US$6 billion in a settlement that substantially ends a global probe into misconduct in the US$5-trillion-a-day market.

In total, authorities in the United States and Europe have fined seven banks over US$10 billion for failing to stop their forex traders from sharing confidential information about client orders and coordinating trades to boost their own profits.

Traders at Citigroup, JP Morgan, Barclays and Royal Bank of Scotland, who described themselves as "The Cartel", used an invitation-only electronic chat room and coded language to manipulate the price of US dollars and euros between December 2007 and January 2013, according to US authorities.

The four banks pleaded guilty to conspiring to manipulate the foreign exchange market. The misconduct occurred after regulators had started punishing banks for rigging the London interbank offered rate (Libor), an interest rate benchmark.

Britain's Barclays faced the biggest fine Wednesday with a penalty of US$2.4 billion because it did not join in an earlier November settlement with British and some US authorities due to complications with its regulator in New York.

Barclays fired eight employees as part of its settlement and New York's Superintendent of Financial Services warned that it was still probing the bank's use of electronic systems for foreign exchange trading, which make up the vast majority of transactions in the market.

"Put simply, Barclays employees helped rig the foreign exchange market. They engaged in a brazen 'heads I win, tails you lose' scheme to rip off their clients," Benjamin Lawsky said. "While today's action concerns misconduct in spot trading, there is additional work ahead."