The Royal Bank of Scotland (RBS) has suspended the bonuses of 18 employees as the bank continues its internal investigation into forex rigging. The bank has so far investigated the conduct of over 50 present an previous staff in relation to the scandal and has looked over millions of documents.
The bank announced yesterday that 18 forex traders employed by the bank would have their bonuses frozen in relation to the investigation. According to the bank’s head of conduct and regulatory affairs, Jon Pain, “no further bonus payments will be made or unvested bonus awards released to those in scope of the review until it has concluded and its recommendations have been considered by the Remuneration Committee and the Board Risk Committee.”
However, it has not been definitely established whether the traders in question have in fact done any wrong, and each is being investigated individually. As such, the number of individuals associated with the investigation and having their bonuses frozen could be subject to change by the time of the final review. Currently, the final review is due for early 2015.
The Foreign Exchange (ForEx) market is currently worth around US$5.3 trillion a day. It involves trading funds into different currencies in order to achieve a profit. By correctly predicting which currencies will rise in value against other monies and then placing funds in those currencies, it is possible for experienced traders to make significant profits (and for novices to make equally significant losses).
The recent scandal surrounds attempts made by certain traders to not just predict the market but deliberately manipulate it in order to rig their investments for success. By trading confidential information about their clients’ investments, traders were able to deliberately coordinate trades in order to noticeably impact the market and boost profits. This is one of the latest in a line of scandals that have impacted public confidence in the banking system in recent years.
RBS was among the banks embroiled in the scandal, and last month was handed a fine worth £400 million by international regulators. The bank is reportedly still in discussion with other regulatory bodies, and could potentially face further fines.
According to an investigation carried out by the Bank of England and the Financial Conduct Authority (FCA), traders openly boasted about their manipulation of the market in online chatrooms. Transcripts show boasting from a number of traders, including some employed by RBS. Six of the bank’s employees are currently facing disciplinary action, and three of those have been suspended ahead of further investigation into their involvement in the scandal.
The bank has declined to disclose the identities of the eighteen staff who have now had their bonuses frozen.