UPDATE: This article, originally published at 10:32 a.m. on Wednesday, May 20, has been updated throughout with fines from federal regulators and analyst commentary.
NEW YORK (TheStreet) -- Six of the world's largest banks including, including JPMorgan Chase (JPM) and Citigroup (C), will pay fines totaling $5.9 billion after a federal investigation into rigged trades of the globe's most widely used currencies: the U.S. dollar and the euro.
JPMorgan, Citigroup, Barclays (BCS), and Royal Bank of Scotland (RBS), will pay $2.5 billion and plead guilty to violating antitrust laws in a settlement with the U.S. Justice Department, the agency said on Wednesday. While the corporations admitted responsibility and agreed to notify customers and other businesses that may have been been affected, executives separately put the blame on individual employees.
Between December 2007 and January 2013, euro-dollar traders at Citigroup, JPMorgan, Barclays and RBS -- self-described members of "The Cartel" -- gathered in an exclusive electronic chat room and used coded language to coordinate their moves in the U.S. dollar-euro market, according to plea agreements to be filed in federal court in Connecticut. By agreeing not to buy or sell at certain times, they protected each other's trading positions, the Justice Department said.
The government "intends to prosecute all of those who tilt the economic system in their favor, who subvert our marketplaces and enrich themselves at the expense of the American consumer," Attorney General Loretta Lynch said during a news conference. "The prices the market sets for the currency influences every sector of every economy in the world. It harmed countless consumers, investors, and institutions around the world -- including the banks' own customers."
The dollar-euro market "is as big as it gets," said Assistant Attorney General Bill Baer, head of the Justice Department's antitrust division. About $500 billion in dollars and euros is traded every day, making the market five times larger than all U.S. stock exchanges combined.
"The banks pleading guilty today are not ordinary market participants," Baer said. "They are 'market makers,' representing 25 percent or more of dollar-euro exchange rate transactions each year. As such, they are uniquely positioned to manipulate the market."
Bank traders who were members of "The Cartel" used the chat room to move exchange-rate fixes -- snapshots of the prices to buy and sell currency at specific times of the day -- in whatever direction would be most profitable to them, Baer said.
"The snapshot rates became the price paid for billions of dollars of currency bought or sold on any given day," he said, which cheated customers who relied on the fixes to fairly reflect market prices.
Each of the banks agreed to a fine proportional to its involvement, the Justice Department said: Citigroup, involved from December 2007 until at least January 2013, will pay $925 million; Barclays, involved from December 2007 until July 2011, and then from December 2011 until August 2012, will pay $650 million; JPMorgan, involved from July 2010 through January 2013, will pay $550 million; and RBS, involved from December 2007 until April 2010, will pay $395 million.
Those banks and two others -- UBS (UBS) and Bank of America (BAC) will also pay cumulative fines of $3.4 billion to regulators from the Federal Reserve to the Commodity Futures Trading Commission.