Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

Another Forex update

with 2 comments

Not a lot of new info in this report on the TBTF banks’ settlement discussions for manipulating foreign exchange rates, or forex. There are a few tidbits at the inside-baseball level that are interesting. If you’ve been reading my posts on banking fiascos, you will appreciate this info.

2/13 – Bloomberg Business – U.S. is Seeking Billions from Global Banks in Currency Manipulation Settlement

DoJ is looking for a simultaneous settlement with all the banks so none of them are singled out.

Total dollar amount on the table is reportedly $4B with starting point for each bank about $1B, give or take.

Here’s what the really deep-inside-baseball lineup is looking like:

  • Barclays – settlement & guilty plea
  • Citigroup- settlement & guilty plea
  • JPMorgan- settlement & guilty plea
  • RBS- settlement & guilty plea
  • UBS – smaller settlement than others but no guilty plea since they participated early

HSBC isn’t on the list. Won’t backtrack to recall why at the moment.

Those five plus HSBC already agreed to pay $4.3B to a variety of regulators.

Article hints, like previous reports, that there may be individual prosecutions.

reserves

Increases in reserves for legal settlements in the 4th quarter, per the article:

  • $1.1B – Barclays
  • $2.9B – Citigroup
  • $1.1B – JPMorgan
  • $1.7B – RBS
  • $0.2B – UBS

What about DFS? What’s the total settlement tab gonna’ be?

Most remarkable thing in the article is no mention anywhere of what NY Department of Financial Services may want to see in a settlement.  I’ll make a completely wild guess they will be looking for dollars in the same range as DoJ, or maybe higher.

My guess from my tiny little desk in my tiny little corner of the audit world of total fines for manipulating forex: $4.4B already paid, plus $4B to DoJ, plus another $2B to $5B to NYDFS, plus another $2B from HSBC, add a +/-$1B factor, for a range of $11B to $16B with point estimate of $13B.

So here’s a question for C-suite managers: how much would effective internal controls of trading desks have cost? Less than a couple of billion per bank?

Some of my previous posts:

Written by Jim Ulvog

March 16, 2015, 9:12 am at 9:12 am

Posted in Other stuff

2 Responses

Subscribe to comments with RSS.

  1. […] wild guess is here for the total fines for manipulating forex rates: a range of $11B to $16B with point estimate of […]

  2. […] Speculation of possible settlements with U.S. DoJ is for around $4B. […]


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: