The Department of Justice (DOJ) is conducting a criminal investigation into the brokerage business exchange spot, the date of settlement and delivery are shifted in time, according to the bank statement published on Monday in a stock paper. The Department considers the strength of the controls put in place by the bank on these activities.
In addition to this criminal aspect, the American supervisor of commodity markets and derivatives (CFTC), the UK Financial Conduct Authority (FCA) and other unidentified foreign regulators conduct civil investigations on this issue, according to JPMorgan.
The firm run by Jamie Dimon pledges to “cooperate” and said to be “currently in discussions with the DOJ” and other regulators “to resolve these investigations.”
JPMorgan Chase, which has already paid billions of dollars to settle disputes related to its practices in real estate, however, warns that these negotiations may not lead to anything conclusive.
Meanwhile, it was decided to increase the money set aside to resolve the pending litigation from 1.3 billion to 5.9 billion dollars, against 4.6 billion ascribed for that purpose in late June.
Regulators of worldwide traders suspect large financial institutions to manipulate prices in their favor via discussion on the internet forums and instant messaging. The foreign exchange market is worth 5.300 billion in transactions per day, with 40% of them passing through London.
Major banks have already suspended the traders in this case and some dealers are prosecuted by the authorities. In recent days, negotiations with regulators have forced financial institutions to report large provisions against future fines. The US Citigroup lowered its quarterly earnings after the event, citing $600 million over provisions related to ongoing legal disputes.
The same path was followed by British Barclays ($800 million), RBS ($640 million) and HSBC ($1.7 billion), the German Deutsche Bank (€894 million) and the Swiss UBS (€1.5 billion).
Six major banks – JPMorgan Chase, Citigroup, UBS, Barclays, RBS and HSBC – are negotiating an agreement with the British and American authorities, shared the sources familiar with the matter who requested the anonymity. “The contours of this collective agreement are already drawn,” they added, indicating that the fine would amount to billions of dollars.
The threat of criminal prosecution of US officials against JPMorgan comes as the DOJ is criticized for having failed to take to court one big name on Wall Street, whose mistakes are nevertheless responsible for the largest financial crisis since 1929.
In mid-September, the Minister of Justice Eric Holder said he heard the criticism and promised prosecution against the big bankers having succeeded, as he said then, in covering up for some of their “tippers”.
“Our ongoing investigation into the manipulation of exchange rates is based on the investigative techniques that involve informants,” he had declared.
Since 2009, the DOJ has treated 60 cases related to the 2008 crisis on financial institutions and managed to impose fines totalling to $85 billion. But hardly any action has been taken in criminal cases. Bank of America received a record financial penalty of $16.6 billion, JPMorgan $13 billion and the French BNP Paribas $8.9 billion for violating US embargoes.