How the forex scandal happened
The forex scandal is a large financial scandal that involved the manipulation of currencies. It began in late 2013 when reports surfaced that currency traders at some of the world’s largest banks had been colluding to manipulate benchmark exchange rates. These rates are used to set the value of trillions of dollars worth of investments and deals, so any manipulation can have a significant impact on the global economy.
Investigators soon determined that the collusion was widespread, and several banks were fined billions of dollars for their involvement. The scandal has continued to make headlines in the years since, as more and more details have emerged. In 2018, a former Citigroup trader became the first person to be criminally charged in connection with the forex scandal.
So how exactly did the scandal happen? Here’s a breakdown of the key events.
2013: Reports of collusion surface
In late 2013, reports surfaced that currency traders at some of the world’s largest banks had been colluding to manipulate benchmark exchange rates. The revelation sent shockwaves through the global financial community, and investigations quickly got underway.
2014: Banks start getting fined
In early 2014, Swiss bank UBS was the first institution to be fined for its role in the forex manipulation scheme. In total, six banks would eventually pay fines totaling billions of dollars.
2015: More details emerge
As investigators continued to dig into the forex scandal, more and more details began to emerge about the extent of the collusion. It was revealed that the manipulation had been going on for years, and involved dozens of banks and traders.
2016: Investigations widen
In 2016, investigators began looking into whether or not the forex manipulation scheme had also impacted other financial markets, such as bond and equity prices.
2017: Barclays fined $150 million
In May 2017, British bank Barclays was fined $150 million for its role in the forex manipulation scheme. This was the first time a bank had been fined for forex rigging since 2015.
2018: Citigroup trader charged
In July 2018, a former Citigroup trader became the first person to be criminally charged in connection with the forex scandal. The trader, Andre Flotron, is accused of conspiracy to commit wire fraud and spoofing, a type of market manipulation. He has denied the charges.
So that’s a brief overview of how the forex scandal unfolded. It’s been a long and complicated process, with more details continuing to emerge as investigations continue. But one thing is clear: this was a huge financial scandal that impacted banks and traders all over the world.***
In the aftermath of the global financial crisis, many banks were found to have been involved in malpractice and fraud. One such scandal was the forex rigging scandal, where several banks were accused of colluding to fix the price of foreign exchange currency transactions.
The forex scandal first came to light in 2013, when a whistleblower at Barclays revealed that traders at the bank had been colluding with counterparts at other banks to manipulate the price of foreign exchange transactions. The revelation sparked an investigation by UK and US authorities, who found that several other banks had also been involved in the scam.
In total, six banks – Barclays, Citigroup, JPMorgan Chase, RBS, UBS and HSBC – were fined a total of $6 billion for their involvement in the forex rigging scandal. The banks were accused of colluding to fix the price of foreign exchange transactions, which resulted in customers being overcharged millions of dollars.
The fallout from the forex rigging scandal has been significant. Several senior bankers have been forced to resign, and the reputation of the banking industry has been tarnished. In addition, customers who were overcharged as a result of the scam are now seeking compensation from the banks involved.