Banks accused of price-fixing the rand: What next?
Three local banks and 14 large foreign banks have been accused of price-fixing the rand and have been referred to the Competition Tribunal for prosecution.
They allegedly did this by creating fake trades to change supply and demand. They are accused of using trader chat rooms to schedule specific times to trade or withhold from buying and selling to manipulate the price. We asked lawyers and traders for some input.
Q: With all this name-calling of banks, are they guilty?
No, the banks are accused of price-fixing. The Competition Commission acts as an investigator, like the police and National Prosecuting Authority. It builds a case and refers it to the Competition Tribunal, which acts as a court to determine innocence or guilt. The tribunal will hear the case.
Q: Could the directors, CEOs or traders be criminally prosecuted if price-fixing did occur?
Unlikely. In May last year the law was changed, allowing managers and directors to be held criminally liable for breaching the Competition Act and price-fixing. Before May only companies, not people, could be criminally prosecuted for collusion. But the directors or traders would have had to be involved in price-fixing after the law changed. It is not clear if banks are accused of price-fixing after May.
The investigation began a year before that in April 2015 and goes back as far as 2007.
Q: What did the Reserve Bank investigation into foreign exchange trading find?
It found certain client information was not kept confidential, but the bank "found no evidence of serious and widespread misconduct in the South African foreign exchange market".
Q: What next for the banks?
The tribunal will now hear the case involving 17 banks in what lawyers say could be a drawn-out process.
The tribunal has been asked by the commission to fine 15 of the banks 10% of their annual turnover for each of the years that they breached the Competition Act.