Forex manipulation investigated by US Justice Department

Published: 30 Oct at 9 AM Tags: Euro,

Accusations of foreign exchange rate manipulation by banks are currently being investigated by the US Justice Department. Antitrust regulators are conducting an ongoing investigation, according to acting head of the Justice Department’s criminal division, Mythili Raman.

Allegations of Libor manipulation have resulted in Rabobank, the Dutch bank, agreeing to hand over more than $1 billion to resolve the situation. Probes are currently being conducted involving other European banks and accusations that they are stockpiling large amounts of cash to cover legal costs.

Manipulation of Libor rates is a problem because large banks do not base calculations on specific transactions, but rather where they think they can borrow from. More than $4 billion has already been paid over in fines by major banks including Royal Bank of Scotland, UBS and Barclays. The financial institutions have also agreed to hand over information to the Justice Department.

Last year UBS paid $1.5 billion to resolve charges related to Libor manipulation. The bank also said it was taking action to combat misconduct concerning the manipulation of forex trading. Earlier this month Credit Suisse said an investigation into its own foreign exchange trading had not turned up any evidence of misconduct.

As part of the investigation, RBS said it had agreed to hand the financial regulator in Britain instant messages that had been sent by one of its former traders to counterparts working for other financial institutions.