Business Crimes Hotline

CONNECTICUT

Four Banks Agree to Plead Guilty to Currency Manipulation Conspiracy

Four major banks have agreed to pay more than $2.3 billion in criminal fines for their roles in a currency-manipulation scheme, the Department of Justice (DOJ) announced on May 20. As part of the deal, each bank will plead guilty to one felony count of conspiring to manipulate the price of U.S. dollars and Euros. Citicorp, which allegedly engaged in the conspiracy from December 2007 until at least January 2013, will pay $925 million, the largest fine. Three other banks ' Barclays, JPMorgan Chase, and the Royal Bank of Scotland (RBS) ' agreed to pay $650 million, $550 million, and $395 million, respectively, amounts reflecting their levels of alleged involvement in the currency-manipulation scheme. Barclays also agreed to an additional $60 million fine for violating a 2012 non-prosecution agreement (NPA) related to manipulation of the London Interbank Offered Rate (LIBOR).

A fifth bank, UBS, agreed to plead guilty to a felony wire-fraud charge related to manipulating the LIBOR, and to pay a $203 million criminal penalty. UBS' conduct violated a 2012 NPA.

The plea agreements, which must still be approved by the District Court for the District of Connecticut, detail the banks' manipulation of the currency exchange markets. For example, bank traders referred to themselves as members of “The Cartel” and regularly conspired with each other to withhold offers to buy or sell currencies at key points during the day, thereby artificially suppressing the demand or supply for foreign currencies. Using an online chat room, traders for the banks coordinated their activities in advance of the daily 1:15 p.m. and 4:00 p.m. “fixes.” The daily fixes are used to fix benchmark prices for financial products worth billions of dollars.

In addition to the pleas announced by the DOJ, the Federal Reserve also announced that it was imposing fines totaling $1.6 billion on the banks, which have already agreed to pay large penalties to a number of financial regulators around the world. In total, the five banks will pay almost $9 billion in fines related to the currency manipulation scheme.

Under the terms of the pleas, each bank will be subject to a three-year probationary period during which it must regularly report its activities to authorities. In announcing the plea agreements, the DOJ noted that it is continuing to investigate individual conduct related to the currency manipulation scheme.

WASHINGTON, DC

Four Swiss Banks to Avoid U.S. Prosecution for Tax-Related Crimes

Four Swiss banks recently reached non-prosecution agreements (NPAs) with the United States stemming from tax-related criminal offenses, according to the DOJ. The banks ' Soci't' Gen'ral' Private Banking, MediBank AG, LBBW AG, and Scobag Privatbank AG ' agreed to collectively pay more than $2.1 million in penalties as part of the NPAs.

According to the government, the banks engaged in various behaviors intended to shelter U.S. clients from their obligations to the Internal Revenue Service (IRS). For example, Soci't' Gen'ral' Private Banking, which agreed to a penalty of $1.3 million, offered U.S. clients a variety of services it knew would help those clients in concealing assets and income from the IRS. Among other things, the bank opened accounts in the name of sham corporate entities and had bank employees act as officers of the sham entities. Soci't' Gen'ral' Private Banking also withdrew money from accounts it knew might come under law enforcement scrutiny and then stored that money in safe deposit boxes. MediBank, which agreed to an $800,000 penalty, impeded the ability of U.S. authorities to learn the identity of the bank's accountholders by offering numbered accounts.

The NPAs are part of the DOJ's Swiss Bank Program announced in Aug. 2013. Under the program, Swiss banks can avoid criminal prosecution if they cooperate with federal prosecutors and disclose their tax-avoidance strategies. To qualify for an NPA, the banks must also disclose the names of other banks who transferred money into, or accepted money from, secret accounts tied to U.S. clients. The program excludes Swiss banks currently under criminal investigation from receiving non-prosecution agreements.

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CONNECTICUT

Four Banks Agree to Plead Guilty to Currency Manipulation Conspiracy

Four major banks have agreed to pay more than $2.3 billion in criminal fines for their roles in a currency-manipulation scheme, the Department of Justice (DOJ) announced on May 20. As part of the deal, each bank will plead guilty to one felony count of conspiring to manipulate the price of U.S. dollars and Euros. Citicorp, which allegedly engaged in the conspiracy from December 2007 until at least January 2013, will pay $925 million, the largest fine. Three other banks ' Barclays, JPMorgan Chase, and the Royal Bank of Scotland (RBS) ' agreed to pay $650 million, $550 million, and $395 million, respectively, amounts reflecting their levels of alleged involvement in the currency-manipulation scheme. Barclays also agreed to an additional $60 million fine for violating a 2012 non-prosecution agreement (NPA) related to manipulation of the London Interbank Offered Rate (LIBOR).

A fifth bank, UBS, agreed to plead guilty to a felony wire-fraud charge related to manipulating the LIBOR, and to pay a $203 million criminal penalty. UBS' conduct violated a 2012 NPA.

The plea agreements, which must still be approved by the District Court for the District of Connecticut, detail the banks' manipulation of the currency exchange markets. For example, bank traders referred to themselves as members of “The Cartel” and regularly conspired with each other to withhold offers to buy or sell currencies at key points during the day, thereby artificially suppressing the demand or supply for foreign currencies. Using an online chat room, traders for the banks coordinated their activities in advance of the daily 1:15 p.m. and 4:00 p.m. “fixes.” The daily fixes are used to fix benchmark prices for financial products worth billions of dollars.

In addition to the pleas announced by the DOJ, the Federal Reserve also announced that it was imposing fines totaling $1.6 billion on the banks, which have already agreed to pay large penalties to a number of financial regulators around the world. In total, the five banks will pay almost $9 billion in fines related to the currency manipulation scheme.

Under the terms of the pleas, each bank will be subject to a three-year probationary period during which it must regularly report its activities to authorities. In announcing the plea agreements, the DOJ noted that it is continuing to investigate individual conduct related to the currency manipulation scheme.

WASHINGTON, DC

Four Swiss Banks to Avoid U.S. Prosecution for Tax-Related Crimes

Four Swiss banks recently reached non-prosecution agreements (NPAs) with the United States stemming from tax-related criminal offenses, according to the DOJ. The banks ' Soci't' Gen'ral' Private Banking, MediBank AG, LBBW AG, and Scobag Privatbank AG ' agreed to collectively pay more than $2.1 million in penalties as part of the NPAs.

According to the government, the banks engaged in various behaviors intended to shelter U.S. clients from their obligations to the Internal Revenue Service (IRS). For example, Soci't' Gen'ral' Private Banking, which agreed to a penalty of $1.3 million, offered U.S. clients a variety of services it knew would help those clients in concealing assets and income from the IRS. Among other things, the bank opened accounts in the name of sham corporate entities and had bank employees act as officers of the sham entities. Soci't' Gen'ral' Private Banking also withdrew money from accounts it knew might come under law enforcement scrutiny and then stored that money in safe deposit boxes. MediBank, which agreed to an $800,000 penalty, impeded the ability of U.S. authorities to learn the identity of the bank's accountholders by offering numbered accounts.

The NPAs are part of the DOJ's Swiss Bank Program announced in Aug. 2013. Under the program, Swiss banks can avoid criminal prosecution if they cooperate with federal prosecutors and disclose their tax-avoidance strategies. To qualify for an NPA, the banks must also disclose the names of other banks who transferred money into, or accepted money from, secret accounts tied to U.S. clients. The program excludes Swiss banks currently under criminal investigation from receiving non-prosecution agreements.

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