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By Karen Freifeld, Sarah N. Lynch and Soyoung Kim
NEW YORK/WASHINGTON, May 14 (Reuters) - Banks wantassurances from U.S. regulators that they will not be barredfrom certain businesses before agreeing to plead guilty tocriminal charges over the manipulation of foreign exchangerates, causing a delay in multibillion-dollar settlements,people familiar with the matter said.
In an unprecedented move, the parent companies or mainbanking units of JPMorgan Chase & Co, Citigroup Inc, Royal Bank of Scotland Group Plc, Barclays Plc and UBS Group AG are likely to plead guiltyto rigging foreign exchange rates to benefit their transactions.
The Wall Street Journal reported on Thursday night that theU.S. Justice Department voided a 2012 settlement with UBS overthe issue after more than a year of talks.
Citing current and former government officials, it said thenegotiations were expected to result in deals next week in whichUBS would pay a fine of about $200 million and plead guilty toallegations that its traders manipulated the London interbankoffered rate, or Libor, before 2012.
The banks are also scrambling to line up exemptions orwaivers from the Securities and Exchanges Commission and otherfederal regulators because criminal pleas trigger consequencessuch as removing the ability to manage retirement plans or raisecapital easily.
In the past, waivers have generally been granted without ahitch. However, the practice has become controversial in thepast year, particularly at the SEC, where DemocraticCommissioner Kara Stein has criticized the agency for rubberstamping requests and being too soft on repeat offenders.
Negotiating some of the waivers among the SEC's fivecommissioners could prove challenging because many of thesebanks have broken criminal or civil laws in the past thattriggered the need for waivers.
Many of the banks want an SEC waiver to continue operatingas "well-known seasoned issuers" so they can sell stocks anddebt efficiently, people familiar with the matter said. Such adesignation allows public companies to bypass SEC approval andraise capital "off the shelf" - a process that is speedier andmore convenient.
Several of the people said another waiver being sought bysome banks is the ability to retain a safe harbor that shieldsthem from class action lawsuits when they make forward-lookingstatements.
The banks involved are also seeking waivers that will allowthem to continue operating in the mutual fund business, sourcessaid.
At least some of the waivers at issue in the forex probewill need to be put to a vote by the SEC's five commissioners.No date has been set yet, a few of the people familiar with thematter said.
The plea deals could be announced as soon as next week, twoof the people said, adding that not all the penalties had beenfinalized yet.
Peter Carr, a spokesman for the U.S. Justice Department,declined comment on the timing or reason for a possible delay ofany agreements. Citi, JPMorgan, RBS and UBS did not respond torequests for comment. A Barclays spokesman declined to comment.
The Justice Department has been negotiating with the banksfor months over how to resolve allegations that traders colludedto rig rates in the largely unregulated $5.3 trillion-a-daycurrency market.
If the parent companies of U.S.-based JPMorgan and Citigroupplead guilty as planned, it would be the first time in decadesthat a major American financial institution has done so.
Last year, when Swiss bank Credit Suisse AG pleaded guilty in the United States to helping wealthy Americansevade taxes, it became the largest institution in over 20 yearsto admit criminal wrongdoing. It was soon followed by Frenchbanking group BNP Paribas SA. (Reporting by Karen Freifeld, Sarah N. Lynch and Soyoung Kim.Editing by Andre Grenon and Ken Wills)
