Citigroup, HSBC Among Banks Named in Brazil Currency Probe

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CHART: Currency-Rigging Penalties Soar

Citigroup Inc., Morgan Stanley, HSBC Holdings Plc and 12 other banks are being investigated for currency manipulation by Brazil’s antitrust agency after similar probes in the U.S. and Europe led to penalties of more than $10 billion.

Cade, as the regulator is known, found “strong signs” of anticompetitive price-fixing practices, according to an e-mailed statement Thursday from the Brasilia-based regulator. Banks coordinated currency transactions and pricing data and blocked competitors from operating freely in the Brazilian foreign-exchange market, according to the allegations.

The accusations mirror cases brought against many of the same firms by regulators in the U.S. and Europe, which reached multibillion-dollar settlements this year that included guilty pleas from banks including New York-based Citigroup and JPMorgan Chase & Co. South Korea and South Africa also have opened probes into whether firms colluded in foreign-exchange markets.

“This investigation may create a big problem because some of the banks are large players in the Brazilian currency market,” Joao Paulo de Gracia Correa, a foreign-exchange superintendent at SLW Corretora de Valores, said in a telephone interview from Sao Paulo.

Sharing Information

“There were additional signs of anticompetitive practices such as sharing sensitive commercial information in the currency market, including trades, contracts, futures prices, client orders and strategies,” Cade said in the statement. The accused have 30 days to respond.

JPMorgan, Bank of America Corp., UBS AG, Deutsche Bank AG, Barclays Plc, Credit Suisse Group AG, Bank of Tokyo-Mitsubishi UFJ Ltd., Nomura Holdings Inc., Royal Bank of Canada, Royal Bank of Scotland Group Plc, Standard Bank Group Ltd. and Standard Chartered Bank are also part of the investigation, Cade said.

One firm under investigation signed a cooperation pledge, providing information as it seeks to avoid punishment or at least win leniency, according to Eduardo Frade Rodrigues, the regulator’s superintendent, who didn’t identify the company. Penalties could amount to as much as 20 percent of revenue from operations involved, according to Cade, which didn’t elaborate on how that would be defined.

Individuals Investigated

The agency is working on the case with the nation’s central bank and other international authorities. The probe doesn’t currently target any of Brazil’s domestic banks, the superintendent said. Officials at the 15 banks either declined to comment on Cade’s allegations or couldn’t immediately be reached.

Thirty individuals are being investigated as well, according to the statement, which said the alleged illegal behavior spanned from 2007 to 2013.

The U.S. Justice Department announced a $5.8 billion settlement in May with six of the world’s biggest banks on its currency-rigging probe. South African authorities will probably reach a deal with some the world’s biggest banks over accusations they rigged trading in the rand, David Lewis, the former head of the nation’s Competition Tribunal, said last month.

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