The European Commission (EU) authorities has fined U.S. banking giant JPMorgan Chase more than $78 million for manipulating an international financial benchmark and participating in a derivatives cartel tied to the Swiss franc. Swiss banking giants UBS and Credit Suisse were also fined by the EU for their role in operating a cartel for Swiss franc derivatives. All agreed to settle the violations. Total fines in the case, the latest in a series of EU investigations of financial manipulation, came to roughly $119 million.
According to the EU, the first violation involved JPMorgan and RBS collusion over Swiss franc LIBOR — the common shorthand for the London Interbank Offered Rate – which involves multiple currencies worldwide for varying time periods, and is used to set rates on trillions of dollars in mortgages and loans. We have written extensively on this in previous issues.
JPMorgan and RBS secretly colluded between March 2008 and July 2009 to rig the benchmark in an effort to distort the pricing of derivatives indexed on it, the EU said. The second violation focused on JPMorgan, RBS, UBS and Credit Suisse in their role as leading market makers in Swiss franc interest-rate derivatives. It was reported that the banks agreed to quote wider, fixed spreads to third parties on certain categories of derivatives while maintaining narrower spreads among themselves.
According to the EU, one objective of the collusion “was to prevent other players from competing on the same terms in this market.” The new penalties are smaller than the fines of 1.7 billion euros ($2.2 billion) that the EU imposed in December on six banks for manipulating Euro (Euribor) and Japanese yen (Libor) benchmarks.
Source: USA Today
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