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Mass fraud on the forex market. Five banks were punished

Mass fraud on the forex market. Five banks were punished

created Natalia Bojko17 May 2019

16 in May the European Commission announced in an official statement imposing on five banks a penalty with a total value exceeding billion euros. The EU's decision to financially impose sanctions on these institutions was due to the discovery of the manipulations they had committed. The entire investigation in this case lasted for several years (practically since the 2013 year, conducted by the EU), and the final penalty imposed on the banks was reduced by 10% due to the reliable cooperation of the accused with the European Commission.

Be sure to read: ApuroFX with 2 million USD penalties from the US regulator

Exchange of confidential data

The European Commission proved the guilt of five banks in a several-year investigation. The manipulation of the currency exchange market has been: Barclays, JPMorgan, Citigroup, MUFG and The Royal Bank. The main accusations and reservations concerned the spot exchange of currencies on the forex market (mainly: the euro, the dollar, the pound and the yen, as well as the Australian dollar, Swedish and Danish crowns). The whole matter revolved around the alleged collusion and the exchange of confidential information between the above institutions. This exchange concerned information about pending orders and planned transactions. Messages that migrated between banks also contained data about the value of orders, as well as strategies used by people or institutions that ordered them.

Interbank bank

To exchange the above information, between the banks, came through a specially created chat. Traders involved in the collusion of banks, thanks to the access to it, could unfairly use the published data in order to obtain greater benefits from the concluded position. Almost all (traders) knew each other personally.

Record punishment

As I mentioned above, the penalty was reduced by 10%. Nevertheless, significant sums remain to be paid.  Penalties are not imposed evenly, so the amount over 1 billion has not been imposed in the same proportions on the guilty party.

For a penalty of over 1, a billion euros consists of 811 million euros imposed on Citigroup, JPMorgan and Barclays. Amount of EUR 257 in total  banks RBS, MUFG and Barclays were charged to the banks. Only Swiss UBS has protected itself from financial sanctions. He contributed to the disclosure of a crime between traders freely using confidential data.

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About the Author
Natalia Bojko
Graduate of the Faculty of Economics and Finance, University of Białystok. He has been actively trading on the currency and stock markets since 2016. It assumes that the simplest analyzes bring the best results. Supporter of swing trading. When selecting companies for the portfolio, he is guided by the idea of ​​investing in value. Since 2019, he has held the title of financial analyst. Currently, he is the co-CEO & Founder in the Czech proptrading company SpiceProp. Co-creator of the Podlasie Stock Exchange Academy project (XNUMXrd and XNUMXth edition).