Between December 2007 and January 2013, traders at four of the banks, Citi, JPMorgan, Barclays and Royal Bank of Scotland, which is still part owned by the British tax payer, "used an electronic chatroom and coded language to manipulate benchmark exchange rates," according to the US Department of Justice.
The traders in question referred to themselves as members of "The Cartel" or "The Mafia" allegedly sharing customer orders on chat rooms.
Currencies trade nearly 24 hours a day, seven days a week. The market pauses twice a day, a moment known as the 'fix'. In the chat room, the traders, or members of the self-proclaimed "mafia" allegedly shared client orders with rivals ahead of the 'fix', pumping up currency rates to make profits.
The statement from the DOJ added that UBS had engaged in deceptive trading and sales practices, including "undisclosed mark-ups" on certain FX transactions and "UBS traders and sale staff used hand signals to conceal those mark-ups from customers".
UBS, one of the five banks, has agreed to plead guilty to manipulating key interest rates and will pay a separate $203 million criminal penalty.
But the banking scandal on both sides of the Atlantic is far from being over. The New York State Department of Financial Services and the UK is still investigating Barclays over its electronic trading methods. The Royal Bank of Scotland is facing action from major investors over information it provided to the market during the financial crisis. It's also facing an investigation over its mortgage business in the US.
UK Banks crashed 2008 &WE bailed them out. My house has lost 50K, Ive not received even £1 compensation from Banks/Gov in return #austerity— LawrenceMcNeill ⛔️✌️ (@ljam185) May 20, 2015
Meanwhile, the fines imposed on the five banks do break a number of records — but they could be seen by some on the global financial market as relatively small change.
The guilty pleas on the other hand, are seen as significant. Settlements made in previous investigations have been made without an admission of guilt.