New York Criminal Attorney: NY Criminal Defense – Bukh Law Firm

Major US Banks In The Midst Of A Legal Investigation

J.P. Morgan Chase is currently facing a criminal investigation by the Justice Department with respect to the behavior of traders in the foreign exchange market. JP Morgan is the largest bank in the US. Along with this criminal investigation, JP Morgan is also facing civil investigations by the Commodity Futures Trading Commission (CFTC), the UK’s Financial Conduct Authority (FCA) and other foreign government authorities.

More than a dozen giant banks are being investigated in both the US and Britain. These include JP Morgan, Citigroup, HSBC, Deutsche Bank, Barclays, the Royal Bank of Scotland and UBS. Several regulators are probing the alleged fixing of currency markets including the Financial Conduct Authority (FCA) and the UK’s Serious Fraud Office
Inquiries are being conducted at whether traders buying and selling currencies colluded with one another to manipulate prices in the currency market. A settlement with British regulators is expected this month. According to the New York Times, the federal prosecutors are aiming to file criminal charges against at least one of the six banks by the end of this year.

JP Morgan does not appear to be very optimistic about a settlement. During the filing on Monday, the bank said that it is currently engaged in discussions with the regulators in Britain and the US but there is no assurance that the discussions will result in a settlement. HSBC has also indicated that there is no certainty that a resolution will take place and even if one is reached, it is likely to involve a significant financial penalty.

It is believed that JP Morgan will incur nearly $1.1 billion legal costs while resolving the foreign exchange investigation. The bank is also raising nearly £1.3 billion as that seems to be the estimated amount the bank owes in excess of its reserves. Citibank has also set aside $600 million to deal with this investigation. This is in addition to the $950 million they had put aside during the third quarter.

The currency trading market is one of the largest in the world with nearly $5 trillion being exchanged every day. Traders are often suspected of manipulating prices to help trading records. But for JP Morgan, this would the latest big legal hits that it would have to absorb. Already, the bank has incurred $22.9 billion in legal expenses since 2010 including a mortgage securities settlement last year.

There is no guarantee of a settlement but even if there is, it will be interesting to see how this plays out.