Citigroup Inc. has agreed to pay $394 million to settle a lawsuit that accused the bank of manipulating the foreign exchange market. This settlement of a civil lawsuit is separate from the $5.6 billion settlement that Citi and four other major banks also agreed to pay to resolve criminal charges over rigging the forex market. Citi also agreed to plead guilty as part of the criminal settlement. Citi will pay $925 million as its share of the $5.6 billion criminal settlement. Twelve banks are implicated in the civil lawsuit, including Barclays, Credit Suisse, and Goldman Sachs. This is just the latest in a string of market manipulation financial fraud cases brought against the world’s largest banks involving the rigging of, among other things, the interest-rate benchmark libor and the manipulation of oil-market prices.
JPMorgan Chase & Co. was the first bank to settle with investors, when it agreed to pay $99.5 million in January. Two months later UBS agreed to pay $135 million to settle the claims brought against it. Bank of America Corp. then agreed to pay $180 million to settle claims it faced. As is typical in market rigging cases, the settling banks agreed to provide documents and other assistance to plaintiffs as they pursue claims against other banks. Banks accused of the wrongdoing also have paid billions of dollars in fines to European regulators.
Notwithstanding these jaw-dropping settlement amounts, we don’t expect Wall Street’s largest banks to change the way they do business. With the banks earning billions of dollars in profits per quarter, these regulatory fines and lawsuit settlements are just a cost of doing business. For example, JP Morgan had net income of $5.9 billion on revenue of $24.8 billion in the first quarter of 2015. During the same three months, Citigroup enjoyed a net income of $4.8 billion on nearly $20 billion in revenue. With income like this, the fines and settlements leave more than enough money for the bank to stay in business and for the banks’ executives to pay themselves millions upon millions of dollars. Absent criminal prosecutions and convictions of the individuals responsible for manipulating trillions of dollars of financial instruments, we do not expect banks to change their ways.
If you or someone you know has been the victim of financial fraud, contact the New York City financial fraud lawyers at DKR for a consultation. With offices also in Los Angeles and Miami, financial fraud lawyers at Dimond Kaplan & Rothstein, P.A. are available for in-person consultations. Contact us today to set up an appointment.