Major Banks Suspected Of Collusion In Bond-Rigging Probe (#GotBitcoin?)

Deutsche Bank, Bank of America, Credit Suisse, Crédit Agricole and another global bank could face fines of up to 10% of their annual world-wide revenue if found guilty. Major Banks Suspected Of Collusion In Bond-Rigging Probe

The European Commission suspects Deutsche Bank AG, Credit Suisse Group AG, Crédit Agricole SA and another global bank of colluding to manipulate a multi-trillion-dollar government-backed bond market, escalating a long running probe.

The European Union’s executive arm, which opened the investigation almost three years ago, said in a statement Thursday that banks will now lay out their defenses. If found guilty, they could face a fine of up to 10% of their annual world-wide revenue.

The commission didn’t name the banks. Deutsche Bank, Credit Suisse and France’s Crédit Agricole confirmed they were among the four. Shares of Deutsche Bank were down 5% and Credit Suisse shares were 3.1% lower Thursday. Crédit Agricole shares were down 3.3%.

Other banks including Bank of America Corp. had previously said in filings that regulators had asked for information about their trading of such bonds. Bank of America declined to comment Thursday.

Another bank, Nomura Holdings Inc. that had been probed in the case, said it isn’t among the four banks.

“Deutsche Bank has proactively cooperated with the European Commission in this matter and does not expect a financial penalty,” a spokesman said. “As this is an ongoing investigation, we cannot comment further.”

Credit Suisse said the case refers to trading by a single employee who left the bank in early 2016.

“We do not believe any Credit Suisse employees engaged in anticompetitive conduct, and we hope to dispel the concerns raised by the EC,” a spokesman said in an emailed statement.

The commission said that between 2009 and 2015 the four banks may have exchanged sensitive information and agreed on prices of U.S. dollar-denominated supra-sovereign, sovereign and agency bonds, known as SSA bonds. Those are issued by entities like the World Bank and European government agencies. Contact took place mainly through online chat rooms, it added.

Authorities in Europe, the U.K. and the U.S. started investigating alleged collusion in SSA bonds more than three years ago, in one of a series of alleged market-rigging cases that have sent traders to jail and cost banks billions of dollars in fines.

The cases exposed a culture of back scratching and crude banter between traders carrying out customer orders and stained the reputations of some of the world’s largest banks. To avoid repeats, regulators toughened rules, made market reforms around benchmark rate setting and demanded remedial action by banks around their processes.

The U.K. regulator, the Financial Conduct Authority, told traders involved in its investigation a year ago that they had closed the case without action, people familiar with the matter said. A Justice Department investigation is still open, according to the people and bank filings.

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