Forex cartel case: Standard Chartered pleads guilty to manipulating rand, other currencies


British multinational banking and financial services company Standard Chartered has pleaded guilty to manipulating currencies, including the rand, between 2007 and 2013.

According to a statement released by the Competition Commission on Tuesday, the bank had reached a consent agreement with the New York State Department of Financial Services (DFS). It will have to pay $40m (about R530m) to the DFS. 

The commission - which conducted its own investigation into banks which allegedly colluded on currency trades - said it would consider the impact of the consent order on its litigation against banks.

The local forex cartel case dates back to February 2017, when the commission referred to the Competition Tribunal a collusion case for prosecution against 17 banks. They included three of South Africa's big banks, namely Investec, Absa and Standard Bank, Fin24 reported previously.

Collusion since 2007

Among the other banks named were Bank of America Merrill Lynch International Limited, BNP Paribas, JP Morgan Chase & Co, JP Morgan Chase Bank, Standard New York Securities, HSBC Bank,Credit Suisse Group, Commerzbank AG, Australia and New Zealand Banking Group Limited, Nomura International, Macquarie Bank, Barclays Capital, and Barclays Bank.

The commission had started its investigation in April 2015 and found that there had been general agreements to collude on price fixing and market allocation from 2007.

Citibank was the first of the respondents to plead guilty, and reached a settlement agreement with the commission to pay a fine of R69.5m, Fin24 previously reported.

"Citibank undertook to cooperate with the commission and avail witnesses to assist the prosecution of the other banks," the commission said.

Absa had apologised for its involvement and the commission did not issue a fine against the bank, Bloomberg reported.

'Range of tactics'

Since February 2017, the commission has been engaging in litigation with the rest of the banks - Standard Chartered is one of them.

According to a statement from the DFS, its investigation as well as an internal review by the bank, found that bank traders "used a range of illegal tactics to maximise profits or minimise losses at the expense of the bank’s customers or customers at other banks".

"Under the consent order with DFS, Standard Chartered admitted that it failed to implement effective controls over its foreign exchange business, which is conducted at its London headquarters and in other global financial centers, including at its New York branch," the statement read.

In accordance with the consent order, Standard Chartered must make submissions to the DFS on enhanced written internal controls and compliance programmes. It must also improve its risk management programme and set up an enhanced internal audit programme.

The bank will further provide ongoing progress reports to the DFS.  

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