How to get rich - cheat your clients

http://abcnews.go.com/International/wireStory/regulators-fine-global-banks-currency-probe-26850595

Banks Fined Billions for Rigging Currency Markets
LONDON — Nov 12, 2014, 7:20 PM ET
By DANICA KIRKA and MARCY GORDON Associated Press

Traders with nicknames like the "Three Musketeers" and the "A-Team" plotted over Internet chat rooms to manipulate currency markets for years, profiting at the expense of clients — and then congratulating themselves for their brilliance — regulators said Wednesday, as they fined five banks $3.4 billion.

Using profanity-laced banter, the traders coordinated their financial positions in the multi-trillion dollar currency market, securing profits for those inside their circles. "YESsssssssssss," one of them wrote in a chat message. "Yeah baby" and "nice work gents....I don my hat," wrote others, according to documents of their exchanges.

Citigroup, JPMorgan Chase, Royal Bank of Scotland, HSBC Bank and UBS agreed to settlements totaling almost $3.4 billion with the U.S. Commodity Futures Trading Commission, U.K. Financial Conduct Authority and Swiss Financial Market Supervisory Authority. The British regulator said Barclays remains under investigation.

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Manipulation of the exchange rates has "a profound effect on the economy," CFTC Enforcement Director Aitan Goelman said. That's because a host of financial investments bought and sold by major investors like pension funds are based on benchmark rates for pairs of currencies that are fixed daily by the banks.

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In one example, RBS had net client orders to sell British pounds for dollars. This meant the bank would profit if it were able to push the price of pounds lower. An RBS trader used an online chat room to share information with traders at three other firms, allowing him to increase RBS's net sell orders to 399 million pounds from 202 million pounds and to push the price on the spot market as low as $1.6213 from $1.6276. The fix was eventually set at $1.6218.

As a result, RBS made a profit of $615,000.

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