JPMorgan Chase has been fined for over $78 million on Tuesday by European authorities for the manipulation of an international financial benchmark and being involved in operating a cartel for Swiss franc derivatives.
The European Commission also fined the Swiss banking giants UBS and Credit Suisse.
Royal Bank of Scotland was also involved in the violations, however, the bank will not pay fines as it was the one that disclosed details of the operations to the European Commission.
According to Joaquin Almunía, the EU vice president in charge of monitoring competition, the fines in this series of EU investigations of financial manipulation add up to around $119 million.
In a statement, titled “Vice President Joaquín Almunia on 2 cartel decisions concerning Swiss Franc Related Derivatives”, Almunía said:
“Acting against financial cartels is one of our top priorities, given the importance of a healthy, transparent, well-functioning financial sector for the entire economy,”
“All market players in this sector must be aware that no violation of antitrust rules will be tolerated.”
JPMorgan said that it fully cooperated with the European Commission during the investigation. In a statement responding to the EU penalties the bank said:
“The settlement makes no finding that JPMorgan Chase management, or any other JPMorgan Chase employee” except one employee no longer working for JPMorgan “had any knowledge or involvement in the conduct at issue,”
According to the EU, JPMorgan was involved in two violations.
The first violation involved collusive practices by JPMorgan and RBS between March 2008 and July 2009 in relation to the Swiss Franc LIBOR, a benchmark interest rate. They worked together “to influence this benchmark, in order to distort the normal course of the pricing of the derivatives indexed on it.”
The second violation involved JPMorgan, RBS, UBS and Credit Suisse, agreeing to wider spreads to third parties on certain derivatives, while maintaining smaller spreads among themselves. “In this case, unlike in previous cartels in the sector, the banks did not collude to influence a benchmark. Rather, they directly agreed to collectively fix a pricing element which should have been determined by market forces alone.”
“One of their objectives was to prevent other players from competing on the same terms in this market.”
Almunía concluded:
“Acting against financial cartels is one of our top priorities, given the importance of a healthy, transparent, well-functioning financial sector for the entire economy. All market players in this sector must be aware that no violation of antitrust rules will be tolerated.”