Purdue University economist John Connor searched the world for penalties imposed on price-fixing banking cartels and similar violations.
And he found 400 instances of large banks involved in at least 63 separate illegal conspiracies to manipulate markets.
That’s according to a paper released this week by the American Antitrust Institute titled Big Bad Banks: Bid Rigging and Multilateral Market Manipulation.
Connor says that as of January 2014, the total amount of monetary penalties imposed is more than $26 billion.
Many investigations are incomplete, so he expect fines to climb to $40 billion within the next three years.
At least 46 bank employees have been indicted for price fixing and bid rigging.
Several banks have also had serious legal non-monetary restrictions imposed, potentially the most important being deferred prosecution agreements by federal authorities in the United States.
With one minor exception, U.S. and UK antitrust authorities have declined to bring criminal charges against the banks.
Connor states antitrust injuries are likely to rise to trillions of dollars, but compensation to victims will be difficult.
Private damages suits are at very early stages and face many obstacles.
“Big for-profit banks have been roundly criticized in the press in recent years for many commercial, regulatory, and ethical lapses,” Connor says. “After years of investigations by financial, bank and market regulators in the United States and abroad, billions of dollars of fines and other penalties have piled up on these entities. Among the accusations are predatory lending practices, risky investments, fraud, supervisory failures, being in an untouchable regulatory category (too big to fail), and undercapitalization contributing to the Great Recession. Less appreciated is the scale of the numerous investigations into criminal bid rigging, price fixing, and collusive market manipulation — and the huge penalties flowing from antitrust violations.”
Connor surveyed the world’s fifty largest banks — each with a market capitalization exceeding $30 billion and with a total net worth of $4 trillion.
Connor found that of the 50 largest banks, 29 (58%) have been penalized or are under formal investigation for price fixing or market manipulation.