Five Guilty Banks Said Granted SEC Waivers After FX Pleas

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Lynch: How ‘The Cartel’ Manipulated Currency Markets

The five banks that agreed to plead guilty to charges tied to foreign-exchange rigging received the permission they needed from the U.S. Securities and Exchange Commission to keep their businesses running unimpeded, a person familiar with the matter said.

The waivers were approved in a vote by the five-member commission in a closed meeting late Tuesday, said the person, who asked not to be named because the matter isn’t public. Banks pleading guilty need waivers from the SEC to continue managing mutual funds and raising capital quickly.

Citigroup Inc., JPMorgan Chase & Co., Barclays Plc and Royal Bank of Scotland Plc agreed to plead guilty to felony charges of conspiring to manipulate the price of U.S. dollars and euros in settlements with the Justice Department announced in Washington Wednesday. The main banking unit of UBS Group AG agreed to plead guilty to a wire-fraud charge related to interest-rate manipulation.

Waivers have become a contentious issue at the SEC, dividing Democratic and Republican commissioners over how stiff punishments for Wall Street misconduct should be. Even as the Justice Department negotiated guilty pleas with the five banks, a lawmaker questioned whether the waivers should be granted. Banks’ efforts to secure them pushed the settlement back by a week, people familiar with the matter have said.

The banks will face a separate hurdle at the Department of Labor, which oversees about $8 trillion in private-sector pensions. Banks with a felony rap need the department’s permission to keep managing Americans’ retirement money. Each of the five institutions that admitted guilt on Wednesday said in the plea agreements that they intend to apply to the Labor Department for waivers prior to its sentencing.

Recently, the Labor Department waiver process has proven considerably more arduous than the SEC’s. After Credit Suisse AG and BNP Paribas applied to Labor last year for exemptions, each had to appeal to federal judges to delay sentencing dates, to avoid losing their status as Qualified Professional Asset Managers. While BNP has secured the permission it needs from the Labor Department, Credit Suisse is operating under a temporary waiver as officials continue to review its application.

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