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Citigroup, HSBC among banks named in new Brazil currency probe

[SAO PAULO] Citigroup Inc, Morgan Stanley, HSBC Holdings Plc and 12 other banks are being investigated for currency manipulation by Brazil's antitrust agency after similar probes in the US and Europe led to penalties of more than US$10 billion.

Cade, as the regulator is known, found "strong signs" of anticompetitive price-fixing practices, according to an e-mailed statement Thursday from the Brasilia-based regulator. The banks coordinated currency transactions and pricing data and blocked competitors from operating freely in the Brazilian foreign- exchange market, according to the allegations.

The accusations mirror cases brought against many of the same firms by regulators in the US and Europe, which reached multibillion-dollar settlements this year that included guilty pleas by New York-based Citigroup, JPMorgan Chase & Co and other banks. South Korea and South Africa have also opened probes into whether firms colluded in foreign-exchange markets.

"This investigation may create a big problem because some of the banks are large players in the Brazilian currency market," Joao Paulo de Gracia Correa, a foreign-exchange superintendent at SLW Corretora de Valores, said in a telephone interview from Sao Paulo.

One or more of the alleged targets in the Brazil case reached leniency deals with Cade and federal prosecutors, the antitrust agency said, without give more details.

"There were additional signs of anticompetitive practices such as sharing sensitive commercial information in the currency market, including trades, contracts, futures prices, client orders and strategies," Cade said in the statement. The accused have 30 days to respond.

JPMorgan, Bank of America Corp, UBS AG, Deutsche Bank AG, Barclays Plc, Credit Suisse Group AG, Bank of Tokyo-Mitsubishi UFJ Ltd, Nomura Holdings Inc, Royal Bank of Canada, Royal Bank of Scotland Group Plc, Standard Bank Group Ltd and Standard Chartered Bank are also part of the investigation, Cade said.

Thirty individuals are being probed as well, according to the statement, which said the alleged illegal behavior spanned from 2007 to 2013.

Officials at the 15 banks either declined to comment on the Cade allegations or couldn't immediately be reached.

The US Justice Department announced a US$5.8 billion settlement in May with six of the world's biggest banks on its currency-rigging probe. South African authorities will probably reach a deal with some the world's biggest banks over accusations they rigged trading in the rand, David Lewis, the former head of the nation's Competition Tribunal, said last month.