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Brazil settles in forex and opens new probe

Por: Latin LawyerImprimirVisualizar em PDF

Brazil's competition watchdog yesterday announced that it would settle accusations of collusion by five banks in the foreign exchange market, but has opened a new administrative probe into alleged misconduct in the onshore currency market.

Brazil's Administrative Council for Economic Defence (CADE) said last week that it had halted an investigation of Barclays, Citigroup, Deutsche Bank, HSBC and JP Morgan, after the banks agreed to pay a 183.5 million reais (US$54.9 million) financial penalty. Immunity applicant UBS received no fines.

Citicorp was the hardest hit at 80 million reais (US$23.9 million); Deutsche will pay 51 million reais (US$15.2 million); Barclays, HSBC and JPMorgan owe 50 billion reais (US$14.9 billion) altogether. The amount to be paid by each bank depends on the order in which it came forward regarding the conduct, and its relative turnover in the affected market.

CADE continues to investigate Bank of Tokyo-Mitsubishi UFJ, Credit Suisse, Merrill Lynch, Morgan Stanley, Nomura, Royal Bank of Canada, Royal Bank of Scotland and Standard Chartered, as well as 30 individuals. The antitrust agency is conducting its probe in cooperation with the Central Bank of Brazil.

CADE has also launched an investigation into Brazil's onshore currency market. The agency said on 8 December that 10 banks, as well as 19 employees and former employees, attempted to manipulate foreign exchange rates and other financial exchanges, including the Central Bank of Brazil's PTAX benchmark.

CADE said there are "strong indications" of anticompetitive behavior at BTG Pactual, Citibank, HSBC, BBM, BNP Paribas and Múltiplo. There is also evidence of misconduct to a lesser extent at Itaú, Santander, ABN AMRO Real, Fibra and Societé Générale, it said. The competition watchdog said the international banks' Brazilian subsidiaries coordinated through chat rooms on Bloomberg terminals.

CADE declined to comment on whether the new investigation came as a result of the agreement signed with the five banks in the offshore currency market investigation.

CADE launched the investigation into collusion over exchange rates of both local and foreign currencies last year, and largely followed probes in other jurisdictions, including in the US and UK.

At the time, the authority said there were indications that a cartel had aimed to fix prices, to coordinate the purchase and sale of currencies, allocate customers, and hinder or prevent the activities of rivals in the real forex market. 

CADE also said it had found evidence of commercially sensitive information sharing regarding negotiations, futures contracts and pricing; client orders; strategies and trade objectives; sensitive positions in specific operations and orders; and the amount of transactions.

The banks named by CADE last week either declined to comment or could not be reached for comment.


Counsel to Barclays

Machado Meyer Advogados

Partners Tito Amaral de Andrade and Maria Eugênia Novis, and associate Carolina Maria Matos Vieira


Counsel to JP Morgan Chase Bank

Grinberg Cordovil

Partners Mauro Grinberg and Ricardo Motta, and associate Daniel Athias


Counsel to Credit Suisse

Pinheiro Neto Advogados

Partner Renê Guilherme Medrado and associates Daniel Rebello and Luís Henrique Fernandes


Counsel to HSBC

Levy & Salomão Advogados

Partners Ana Paula Martinez and Alexandre Faraco, and associate Marcos Malvar


Counsel to UBS

TozziniFreire Advogados

Partners Marcelo Calliari and Daniel Oliveira Andreoli, and associates Vivian Anne Fraga do Nascimento Arruda and Carolina Gattolin de Paula


Counsel to Deutsche Bank

OC Arruda Sampaio - Sociedade de Advogados

Partners Onofre Carlos de Arruda Sampaio and André Cutait de Arruda Sampaio


Counsel to CitiBank

Lino, Beraldi, Belluzzo e Caminati Advogados

Partner Eduardo Caminati Anders and associates Luiz Fernando Coimbro and Guilherme Missali


Counsel to Royal Bank of Canada

BMA - Barbosa Müssnich Aragão

Partner Barbara Rosenberg in São Paulo

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