The U.S. Department of Justice is preparing to impose the first fines and bring charges in the global investigation into the manipulation of foreign-exchange rates as soon as this year, a person with knowledge of the matter said.
A number of firms and individuals could face penalties by U.S. prosecutors before the year-end, according to the person, who asked not to be identified because the matter is private.
The sanctions would put the Justice Department at the fore of the probe by more than a dozen authorities around the world into whether traders rigged the $5.3 trillion-a-day currency market. Britain’s Financial Conduct Authority, the first watchdog to say it was looking into the matter, said in February it was unlikely to complete its probe this year.
Regulators and prosecutors are scrutinizing allegations that dealers at the world’s biggest banks traded ahead of their clients and colluded to rig the WM/Reuters rates, a benchmark pension funds and money managers use to determine what they pay for foreign currencies. No firms or individuals have been accused of wrongdoing.
The Justice Department is looking into whether traders’ practices violated fraud and antitrust laws. It also has been interviewing bank salespeople and clients in recent months about how customers are charged for currency transactions and whether markups are adequately disclosed, two people with knowledge of the case said last week.
UBS AG (UBSN), the fourth-biggest currency trader, has sought to reduce any potential punishment from U.S. and European Union authorities by cooperating with antitrust investigators and reporting on its own conduct in currency markets, people with knowledge of the matter said in February. In the U.S., a company can seek immunity from the Justice Department’s antitrust division if it’s first to report violations and cooperates fully with a government probe.
Neither authority has said it has made a decision on whether UBS will be granted leniency. Immunity from antitrust violations doesn’t protect the bank from other potential charges from the Justice Department’s fraud division, which have to be negotiated separately.
Serge Steiner, a spokesman for UBS in Zurich, referred to the bank’s disclosure about the FX probes in its first-quarter report. The bank has said it is cooperating with authorities.
Chantal Hughes, a European Commission spokeswoman, declined to comment on the status of the EU investigation.
Citigroup Inc. (C), Deutsche Bank AG (DBK) and Barclays Plc (BARC), the other top currency dealers according to Euromoney Institutional Investor Plc’s annual survey, have all said they are cooperating with the foreign-exchange investigations.
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