HSBC, UBS, RBS, Citi, JP Morgan fined $3.20 billion in the latest international banking scandal

The latest scandal deals with rigging currencies markets, which have a massive daily turnover of $5.3 trillion


The British Financial Conduct Authority (FCA) and the US' Commodity Futures Trading Commission (CFTC) imposed fines totalling $3.16 billion, on five of the world's biggest banks. The banks fined were JP Morgan Chase, Citigroup, Royal Bank of Scotland, HSBC and Swiss bank UBS.


CFTC's statement on the fines said, "attempted manipulation of, and for aiding and abetting other banks' attempts to manipulate, global foreign exchange benchmark rates to benefit the positions of certain traders."


Reports suggested that Barclays was expected to join the settlement but dropped out and the regulators were reportedly looking to pursue their investigations into the bank’s role in the latest rigging accusations.


The foreign exchange markets have a daily turnover of about $5.3 trillion. Currencies are much bigger than stocks and bond markets, and in comparison to some of the fines paid by banks for their involvement in the 2008 financial crisis. These latest fines for banks come after similar fines were levied for trans-Atlantic rigging of LIBOR rates by major banks a few months ago.


Criticisms abound that these fines were too small for the scale of operations and effects of the rigging, like most bank fines over the last few years, stemming from wide-ranging malpractices in the worldwide financial markets. A BBC report estimates that 40% of the world's currencies trade goes through London, which was also why the British FCA was the lead on this investigation, with co-operation from American federal agencies.


While the British Chancellor of the exchequer George Osborne said that the fines were part of a long term plan to restore confidence in the financial markets, there is a long way to go before the impression that for the most part, bankers have escaped serious punishment for their misadventures, is dealt with effectively.


Uncaring Tour Operator

This letter describes the trauma faced by a senior citizen in China due to the negligence of a tour operator who ignored the customer’s grievance. M/s Veena Patil Hospitality Private Ltd, Mumbai, has the business of a tour operator called ‘Veena World’. In September 2014, I (aged 78 years) had opted for their group tour of Japan, South Korea and China.


In China, besides the unhelpful attitude of citizens there, language is a big barrier for any non-Chinese tourist. Instead of taking extra precautions for the ease and safety of the clients, the tour operator gravely erred in not giving us his cell-phone number for China or the phone of the escort guide who remains at the base point in the coach. No bus number was given. The tour operator’s insignia was also not put on the coach, which was used for transporting us to enable us to locate the vehicle in case of an emergency.


On 23rd September, when we visited The Great Wall of China, besides the lack of the above-mentioned information, the tour manager did not even hand over our cable car ticket which is combined for the to and fro journey. While all group members were taken up in cable car for climbing the Wall, we were left on our own. The manager wanted us to meet him at one particular spot for the return journey. Although my roommate and I are senior citizens, we ventured going to the top of the Wall. While climbing down, both of us lost our way to the meeting point. Since we did not have the cell-phone number or the ticket for the return journey, we went on enquiring the way to reach the meeting point. But due to the language problem, no one could guide me. They gestured that I should walk down the way others were doing. We also lost each other’s company.


After walking almost 3,000 feet of uneven or slippery distance, I was out of breath and my thighs began to hurt. Already, an hour had passed; we were late for the scheduled meeting time. At the base, since I had carried my hotel card with me, I took the help of a guard to phone and find out the contact number of our tour manager or escort guide but failed. The guard mentioned that the parking slot for the coach of those who travel by cable car was at some other place. He helped me to get a cab for 150 Chinese Yuan (equal to Rs1,550). I had no alternative but to take a chance. I reached the parking slot (almost 90 minutes behind time) but I was unable to locate our coach in the absence of any registration number or tour operator’s insignia. I felt completely lost.


My presence of my mind made me seek police help. I went to the nearby police station. There, too, I faced the language problem; but the cop was helpful and phoned one of his seniors who knew English. I narrated my trauma and sought his help. He gave instructions to the officer on what should be done, as I had my hotel card.


After 20 minutes, I saw my tour manager coming. He informed me that my room companion too had not reached. Police was requested to provide a wireless video car to track him also. We went in search and found him walking on the road near the base parking slot. Now, to reach to our coach we had to hire another cab but the tour manager made me pay the 300 Yuan (equal to Rs3,100).


Next day, when I asked him whether I would be reimbursed what I had spent, not only did he refuse, but also said that it was my fault and not his or the tour operator’s fault. He also humiliated and insulted me as if I were an imbecile.


I wrote a formal complaint to the company on my return on 1st October. But, so far, the company had not even had the courtesy to acknowledge it, forget any or resolution. This is the height of arrogance and anti-consumer behaviour. I caution all, especially senior citizens, against opting for any tour of such a negligent, irresponsible and uncaring tour operator.

Mohan Siroya, by email



Wonderful Article!


This is with regard to the Cover Story (Moneylife, 30 October 2014) “Learn from Others’ Insurance Mistakes” by Raj Pradhan. It is a wonderful article. Congrats and thanks to Raj Pradhan and Moneylife!

Bhagvanji Raiyani, online comment



Non-core Activity


This is with regard to “New CSR Rules: A Primer” by SD Israni. What are the views of the readers about the fact that the country’s government is demanding corporates do a job that it is itself supposed to do.


Over and above the Corporate Tax on profit that is in excess of 30%, the corporate has to spend 2% on its non-core activity. And, to boot, it has to show to all and sundry that it is doing this diligently!

Suhas J Samagod, online comment



Mind is Designed to Prove Our Beliefs


This is with regard to “We are still trying to find a good theory of the brain” by Prof BM Hegde. Thank you for pointing this out.


I have been researching the question, “What makes humans thrive?” for a few decades by reviewing research from diverse scientific disciplines. I often see research stating, “We observed ____ but need more research to understand it.” But, because I don’t limit myself to one discipline, I’ve seen research in another area that explains, and could have predicted, the results.


Multi-disciplinary research is difficult to publish because the peer review process requires an expert who can review the entire work and some of the answers cross disciplines. A committee review, with experts from each field in the work, might be a solution.


I saw one paper that theorised that our brains were not storage devices, but sending and receiving towers. It indicated that the activity we see in the brain shows circuits that are activated based on where the station is tuned to receive or transmit. The idea really resonated with me. I was expecting to see further work on the concept.


Quantum physics is providing answers about how quickly communication occurs in the body—something the old chemical reactions cannot do. What I call ‘The Galileo Effect’ makes many cling to the old paradigms until they fall under the weight of the exceptions. We need to consider the Parsimony Principle more often when the exceptions to the answer we believe to be true begin piling up. Only when we understand how the mind is designed to prove our beliefs, rather than show us reality, we will do so.

Jeanine Joy, online comment



Extorting Money


This is with regard to “The Menace of Check-posts” by Veeresh Malik. At least these men are in uniforms. In places like Bengaluru, you can see plainclothesmen jump onto the car to extort money if the vehicle is from outside the state.




Survivorship Bias


This is with regard to “Pick the Sensex Winners” by R Balakrishnan. Briefly, the ‘Survivorship Bias’ is totally ignored by the fund managers when they say, “Sensex has given 15% to 17% returns so far.”

Vinayak Bhimrao Mudholkar



Naïve Investors!


This is with regard to “Stop Punishing Investors for the Actions of Rogue Promoters” by Sucheta Dalal. Investments in shares are subject to risk. One cannot avoid the risk. For the mistake made by the pilot, all passengers in the aircraft have to suffer. Similarly, when terrorists attacked the Taj-Mumbai, several people died. Please understand that it is not the regulator’s mistakes that contribute to our sufferings. The reason is the greed of investors. Of late, Indians want to become rich overnight without working. The land deals of DLF had been under scrutiny for some time.


Why did the investors not smell the risk and exit? Do you really want to support the investors?

RS Murthy



Highlight It Every Year!


This is with regard to “The Disease called ‘Diagnosis’” by Prof BM Hegde. Thanks for highlighting and translating this 1999 article from German. It needs to be continuously highlighted, probably every year, so that it eventually benefits more and more people. I read it in Prof Hegde’s book, about a year back and attended his talk at a Moneylife Foundation event.

Narendra Doshi



Stiff Penalties Required


This is with regard to the book review of Not Just an Accountant by Jason Monteiro. The term ‘middle class morality’ defines the aam aadmi who is quite disinterested in the lack of transparency in governance. Recently, the honourable finance minister said the names of those with Swiss Bank accounts would be an embarrassment to the Congress Party. The worst that Arun Jaitley can threaten these thieves with is embarrassment. I am praying for a new avataar of the Aam Admi Party which will shake us out of this complacency.

Ralph Rau


Tax : I-T To Tap over 0.5 million Taxpayers Who Didn’t File Returns
As part of efforts to boost revenue collection, CBDT (Central Board of Direct Taxes) has asked the income tax department to monitor cases of over 500,000 taxpayers who have not filed their latest tax returns.
The electronic database and systems unit of CBDT has issued an official communication in this regard to all chief commissioners of the department to initiate action. The department is looking at measures to bolster the revenue collection work. 


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