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BUSINESS
European Union

JPMorgan hit with $78 million in EU fines

Kevin McCoy
USA TODAY
File photos taken in 2013 shows people walking by JPMorgan Chase headquarters in New York City.

European authorities fined U.S. banking giant JPMorgan Chase (JPM) more than $78 million Tuesday for manipulating an international financial benchmark and participating in a derivatives cartel tied to the Swiss franc.

Swiss banking giants UBS and Credit Suisse were also fined by the European Commission for their role in operating a cartel for Swiss franc derivatives. All agreed to settle the violations.

Royal Bank of Scotland was involved in both violations, but avoided fines by disclosing the cartels to the European Commission, which investigates evidence of antitrust regulations for the European Union.

Total fines in the case, the latest in a series of EU investigations of financial manipulation, came to roughly $119 million, said Joaquin Almunía, the EU vice president in charge of monitoring competition.

"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," Almunía said in a statement announcing the penalties. "All market players in this sector must be aware that no violation of antitrust rules will be tolerated."

JPMorgan said the bank fully cooperated with the EU throughout the investigation. The bank's shares closed up 2.3% at $57.93 on Tuesday.

"The settlement makes no finding that JPMorgan Chase management, or any other JPMorgan Chase employee" apart from a trader who no longer works for the bank "had any knowledge or involvement in the conduct at issue," the bank said in a statement responding to the EU penalties.

According to the EU, the first violation involved JPMorgan and RBS collusion over Swiss franc Libor — the common shorthand for the London Interbank Offered Rate. Libor involves multiple currencies worldwide for varying time periods, and is used to set rates on trillions of dollars in mortgages and loans.

JPMorgan and RBS secretly colluded between March 2008 and July 2009 to rig the benchmark in an effort to distort the pricing of derivatives indexed on it, the EU said.

The second violation focused on JPMorgan, RBS, UBS and Credit Suisse in their role as leading market makers in Swiss franc interest-rate derivatives. The banks agreed to quote wider, fixed spreads to third parties on certain categories of derivatives while maintaining narrower spreads among themselves, the EU said.

One objective of the collusion "was to prevent other players from competing on the same terms in this market," said Almunía.

The new penalties are smaller than the fines of 1.7 billion euros ($2.2 billion) that the EU imposed in December on six banks for manipulating Euro (Euribor) and Japanese yen (Libor) benchmarks.

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