Fines & Penalties Monitor: May 2016

June 13, 2016 at 1:25 PM


Fines, penalties, and settlements incurred by our large bank group – the 18 largest institutions headquartered in the U.S. and E.U. – continue to increase during the month of May. New settlements added to the year-to-date total by about $1 billion, bringing it up to $14 billion.

Three lawsuits made up the majority of the settlement amount. The first was a private lawsuit accusing 14 banks of fixing an interest rate benchmark. Several pension funds and municipalities claimed that these banks conspired to rig the ISDAfix benchmark from 2009 to 2012. Investors use the ISDAfix to price swaps, commercial real estate mortgages, and structured debt securities. Seven of the accused banks settled for a combined total of $324 million, including Bank of America Corp., Barclays Plc., Citigroup Inc., Credit Suisse Group AG, Deutsche Bank AG, JPMorgan Chase & Co. and Royal Bank of Scotland Group Plc. These companies have also agreed to provide “cooperation, transaction data, documents, proffers, and witness interviews” that can be used against the remaining banks that did not settle.

The other two other notable settlements this month involved Bank of America and Citigroup. Bank of America settled with the Federal Home Loan Bank of Seattle over mortgage back securities offerings between 2005 and 2007. Citigroup Inc. settled with the CFTC over allegations of attempting to fix multiple benchmark rates. Citibank NA, Citigroup’s Japanese affiliate, agreed to pay $175 million over charges of manipulating the LIBOR and Euroyen TIBOR. The Japanese affiliate also paid an additional $250 million to the CFTC over charges of manipulating the US Dollar ISDAfix benchmark rates.

As we approach the halfway point of the year, it seems as if our large banks are on pace to equal, if not surpass, the total amount of fines, settlements, and penalties paid in 2015.

Lauren Rosenberg

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