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23 Banks Accused Of Manipulating Currency Exchange

30 different individuals working at 23 different banks have been accused of colluding to manipulate foreign exchange rates. These banks are now defending themselves before the Competition Tribunal against the Competition Commission who are looking to have these banks fined up to 10% of their annual turn over.

Investigation Leads To Accusations

The entire matter began back in 2015 when the Competition Commission launched an investigation. ABSA cut a deal (and are providing evidence of the wrongdoing) and City Bank paid around R70 Million in a settlement agreement over the matter.

Apparently, it has been said that the various banks made secret agreements on when to trade and when not to trade and buy currency from international currency trading platforms. They supposedly took turns to trade so that they could get the right price and it is alleged even created fake bids to manipulate the price of the Rand V Dollar.

Banks such as Standard Bank, Investec and Barclays have been accused alongside other banks such as JP Morgan, HSBC, Credit Suisse and Merrill Lynch.

6 of the Banks accused do not have offices in SA and operate overseas. They are saying that the Tribunal and commission have no authority over their practices.

Other local banks are defending themselves by presenting arguments that they are not being treated fairly, are simply being lumped in with the others without cause or that the Commission doesn’t actually have hard evidence of specific matters and is generalising. Basically, the banks involved would like the matter dropped for a variety of reasons. With a ridiculous 10% annual turn over fine on the table, it is no wonder they are concerned.

Investec and the Commission will battle it out on the 31st (Tuesday) as Investec try to get off the hook, arguing technicalities and a lack of evidence presented in the Commission’s case documents.

The Commission are saying that they have identified the individuals involved, the dates and times when these manipulative trades were done and showed how the various banks did it.

It seems some very fancy (and expensive) lawyers are earning their pay in this matter which looks set to be a very serious matter which could have far reaching effects on shares prices and investor confidence. The case will probably last a week if not more.