South Korea has now joined the company of those countries that have started investigating the foreign exchange market rigging and its effect on the national economy. The Fair Trade Commission of South Korea has started investigating the truth about the alleged abuse of foreign exchange by six global banks and how it affected South Korean firms.
The Six Global Banks
The six banks that are currently being investigated are global banks that have been investigated in various countries for the same charges before. These six global banks include Barclays Plc (NYSE:BCS), Bank of America Corp. (NYSE:BAC), Citigroup Inc (NYSE:C), JP Morgan Chase & Co (NYSE:JPM), Royal Bank of Scotland Group Plc (NYSE:RBS) and UBS Group AG (NYSE:UBS).
The FTC has probed whether these institutions have participated in the manipulation of currency prices of US Dollars and Euros and related markets, companies and banks. Jeong Jae Chan, Chairman of FTC, told the parliament that the FTC is investigating financial activities of six global banks and how their actions affected South Korean companies. He, however, did not mention the names of the banks. The news was initially reported in the Seoul Economic Daily.
When contacted with the spokespersons of these companies, any comment on the issue was denied.
Similar Probes In The Past
Various governments have probed into the same matter with banking companies before. In some cases, the probe resulted in heavy penalties for the financial institutions involved.
The US Justice Department declared a settlement of $5.8 billion to be paid collectively by the six banks. The settlement was announced this May. Surprisingly, five out of six institutions pleaded guilty to the charges made by the currency – rigging probe.
The Monetary Authority of Singapore has been closely following foreign regulators, especially in the matter of currency manipulation. The Authority is currently looking into allegations of inappropriate behavior.
After a yearlong investigation, Hong Kong Monetary Authority did not find any evidence of foreign exchange fraud.
The South Korean Fair Trade Commission has been well known for regulating fair competition among companies and avoiding monopoly in the market. It remains to be seen how the investigation affects these global banks.