Big Banks: Rigging the Game With Impunity
Lately, it seems as though a week doesn’t go by in which a major financial institution isn’t entangled in accusations of fraud, market manipulation, or some other unscrupulous behavior. Last summer, it was the Libor price-fixing scandal that captured headlines.
Proving that the incident was far from an anomaly, many of the same institutions purported to be involved in said scandal are suspected of having rigged the ISDAFIX, another privately calculated rate that acts as the basis for interest-rate swaps.
Of course, high-finance collusive manipulation isn’t limited to esoteric benchmarks. JPMorgan Chase (NYSE: JPM) and Goldman Sachs (NYSE: GS) have recently received unwanted press for their supposed roles in manipulating aluminum’s commodity price by hoarding massive inventories. Then there’s the infamous muni-bond rigging scheme that has — reportedly, of course — played out over years and involved a who’s who of the country’s name-brand financial institutions. As one can imagine, the list goes on and on.