The investigative arm of Brazil’s antitrust authority, the Administrative Council for Economic Defense (CADE), has concluded a years-long probe into a suspected cartel in the offshore foreign exchange market and recommended sanctions against six financial institutions and six individuals.
The banks named in the recommendation are Banco Inbursa, MUFG Bank (formerly The Bank of Tokyo-Mitsubishi), Credit Suisse AG, Bank of America Merrill Lynch Banco Múltiplo (BofA), Nomura International, and Standard Chartered Bank. CADE’s technical department has called for the imposition of fines and the suspension of the alleged practices.
The case, initiated in July 2015, centers on suspected manipulation of spot exchange rates involving foreign currencies, carried out through prior communication between market participants on digital platforms.
The case will now move to the CADE’s administrative tribunal, where it will be assigned to a reporting commissioner for deliberation by the full board. If found guilty, the banks could face fines of up to 20% of their gross revenue. Individuals deemed responsible could be fined up to 20% of the amount levied on their employer.
According to CADE’s General Superintendence (SG), the investigation followed international precedents and standards, with regulators in other countries having already investigated and penalized similar conduct. CADE’s technical report notes that the investigation uncovered a range of evidence, including nine signed cease-and-desist agreements (TCCs), suggesting collusion among competitors to set exchange rates, share commercially sensitive information, and undermine the activities of other market participants such as brokers.
The investigation was sparked by a plea-bargain agreement that provided documents and evidence against the alleged perpetrators. Nearly 30 institutions and individuals were initially investigated, though some later entered into settlements with CADE involving monetary contributions and commitments to end the conduct. As a result, they will not face trial.
Entities recommended for case closure due to compliance with such agreements include Banco Morgan Stanley, Barclays Plc, Citicorp, Deutsche Bank, HSBC Bank Plc, JP Morgan Chase & Co., Royal Bank of Canada, and three individuals.
CADE is also conducting a parallel investigation into the manipulation of Brazil’s onshore currency market, which could lead to sanctions against domestic banks. That inquiry is still ongoing.
Beyond CADE’s antitrust probe, the case has sparked civil and criminal proceedings in Brazil. Individuals have already been penalized by the Central Bank and are facing charges in court.
According to CADE, the alleged anticompetitive practices had a direct impact on Brazil’s financial markets. Participants may have used the coordinated behavior to boost profits or mitigate losses—at the expense of clients. The alleged conduct dates back as far as 2007 and may have continued through at least 2013.
Price-fixing was reportedly facilitated via chat groups on the Bloomberg platform, both in Brazil and abroad. From the outset of the investigation, CADE’s technical staff pointed to “strong indications” of anticompetitive conduct involving the coordination of prices and commercial conditions, as well as the sharing of competitively sensitive information.
News of the expected recommendation was first reported by Valor in July.