Citigroup Drawn into CFTC Probe, Investigating Global Rate-Swap Businesses

The probe investigates the industry’s leading swap dealers following a 2015 lawsuit.

A new probe has been opened against Citigroup Inc., less than six months after reconciling allegations of derivatives market rigging – the latest investigation involves the US Commodity Futures Trading Commission (CFTC), relating in part to a 2015 antitrust lawsuit, per a Bloomberg report.

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Citigroup’s latest government probe emphasizes the group’s trading and clearing of interest-rate swaps business. The CFTC launched an investigation following a 2015 antitrust lawsuit that alleges many of the industry’s leading swap dealers had managed to effectively blocked fund managers from trading specific instruments on exchanges in a bid to preserve their profits.

The investigation is the latest string of probes to target lenders in the US and Europe – the sector had already been convulsed by a duality of scandals, including a wide range of LIBOR investigations and settlements, followed by the manipulation of foreign exchange (FX) rates. The resulting transgressions have collectively seen record fines totaling over $10 billion dolled out by leading banking institutions.

The latest disclosures however cast light on a new segment of bank’s operations, which supported the determination of the prices for a plethora of financial instruments. The investigation is not localized to Citigroup however, as the defendants in the 2015 complaint include Bank of America Corp., Citigroup, Goldman Sachs Group Inc., JPMorgan Chase & Co., UBS Group AG, Barclays Plc, Credit Suisse Group AG, and Deutsche Bank AG.

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