European regulators have imposed fines on JPMorgan Chase & Co. (JPM) and some other big banks for allegedly rigging the benchmark interest rate and taking part in a cartel in Swiss franc-linked derivatives. According to a latest revelation in the series of probes into market manipulation by financial institutions, the European Commission levied a total charge of 94 million euros ($120 million) on JPMorgan, Credit Suisse Group AG (CS) and UBS AG (UBS).
The Commission, the central antitrust regulator of European Union, imposed a total fine of over 72 million euros on JPMorgan for rigging the Swiss franc Libor benchmark interest rate between Mar 2008 and Jul 2009 and operating a separate cartel for Swiss franc derivatives. The regulator also imposed penalties of 9.2 million and 12.7 million euros on two Swiss banks, Credit Suisse and UBS, for operating the derivatives cartel. Notably, The Royal Bank of Scotland Group plc (RBS) alerted the commission about both cartels and escaped total fines of 115 million euros.
These penalties indicate the alacrity of regulators in curbing various malpractices by top financial institutions such as rate-rigging, breaking trade sanctions and other misbehaviors. Moreover, authorities on both sides of the Atlantic have become very strict regarding the formation of cartels. Last year, Deutsche Bank AG (DB) and five other companies were charged a record 1.7 billion-euro penalty for colluding over derivatives linked to the London and euro interbank offered rates.
The concerned banks have admitted to the wrongdoings and agreed to pay the penalties. But such incidences undoubtedly tarnish the prestige of these esteemed financial institutions and dent the confidence of their shareholders.
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