Biggest fines in retail FX industry

All across the world, financial regulators made a crackdown that led to plenty of individual trades and also banks being punished with enormous fines. 2014 was definitely a year with extreme fine amounts. The Financial Conduct Authority imposed fines of total amount $1,107,253,930.25 against 39 companies.

All those millions

On 12 November 2014 fines of total amount $1.7 billion were imposed to five banks, as a result of them failing to control business practices in their foreign exchange trading operations. UBS ($371 million), HSBC ($343 million), JPMorgan ($352 million), Citibank ($358 million) and RBS ($344 million) were penalized by the United Kingdom’s Financial Conduct Authority, which had determined that their fraud operation took place between 2008 and 2013. The banks are believed to have failed managing risks with conflict of interests, client confidentiality, and trading conduct. Confidential customer information was used to illegally manipulate the foreign exchange currency rates and profits.

Another fines of total amount $1.4 billion were imposed on the same five banks by the Commodity Futures Trading Commission in the United States on the exact same date, under the accusation of attempted manipulation global foreign exchange benchmark to benefit certain traders. The CFTC claims that currency traders at the five accused banks had coordinated their trading operations with traders at different banks as well.

In May 2015 the banks agreed to pay fines of total amount $5.7 billion.

Deutsche Bank was fined by the FCA in April 2014 for manipulating Libor and Euribor. The bank had to pay a total of $2.1 billion in fines. The FCA revealed messages that traders exchanged between each other, about illegal trading operations.

Another enormous fine ($155 million) was given to BNY Mellon. The New York bank was accused of failing to comply with client money rules. Instead of keeping records of client accounts, the company was using global platforms for managing custody of assets.

And the winner is…

The biggest fine ever imposed by FCA and FSA was one imposed on Barclays. The bank was fined $348 million for failing to control business practices in its London foreign exchange operations. In 2014 Barclays had to pay a total of $1.83 billion in fines. This so-called Forex-rigging scandal was caused by the bank’s ineffective and inadequate control over its Forex floor.

Georgina Philippou, the acting director of enforcement and market oversight of FCA’s said:

“This is another example of a firm allowing unacceptable practices to flourish on the trading floor. Instead of addressing the obvious risks associated with its business Barclays allowed a culture to develop which put the firm’s interests ahead of those of its clients and which undermined the reputation and integrity of the UK financial system.”

FCA released a statement, in which they claim that Barclays traders, as well as traders from other banks, formed a group that was manipulating with fix rates and particular currencies that they were selling to clients at a higher rate. This actions would ensure a maximum profit for Barclays. Traders that were members of the group called themselves “the players” and “the three musketeers”. One of the traders working for Barclays wrote in electronic chats: “If you ain’t cheating, you ain’t trying.” Well, at least they tried.

Newest records of fines in retail FX industry

In 2016, Binary options provider Banc de Binary (based in Cyprus) had to face $11 million fine for illegally targeting the U.S. investors with its financial services and selling binary options to investors, before registering the securities at the law requires. In another case, Vault Options, Ltd. and GT 365 (two binary options traders from Israel, owned by one company) were accused of violation of Commodity Exchange Act and fraud actions with the clients and had to pay $4.6 million fine.

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