London-based Standard Chartered has reached an agreement to pay $40 million in fines, settling allegations from US authorities regarding the bank's involvement in chat rooms named "Old Gits" and "Butter the Comedian." The accusations revolve around attempts to manipulate the prices of emerging markets currencies.

This development comes at a time when financial institutions seek to move past the fallout from currency trading fines and legal battles, emerging five years after initial claims of benchmark and exchange rate manipulation surfaced. The currency fixing scandal has, in recent years, incurred regulatory fines exceeding $10 billion, resulting in both civil and criminal cases in the United States.

The New York Department of Financial Services asserted this week that Standard Chartered engaged in "unsafe, unsound, and improper conduct" in its foreign exchange business between 2007 and 2013. Traders were alleged to have coordinated with peers at other banks to manipulate prices, shifting emerging market currency values to benefit the bank at the expense of clients.

The "Old Gits" chatroom, described by one trader as a cartel "like Opec but poorer," played a central role in these activities. At least three Standard Chartered traders participated in this chatroom, according to the settlement document. In another chatroom known as "Butter the Comedian," a group of traders devised a scheme to collude with local Brazilian bank traders to manipulate prices in non-deliverable forwards—a common contract for certain emerging market currencies.

One member of the group explicitly stated, "[W]e are trying to gain unfair advantage over competitors, provided by a market distortion."

The fines levied against Standard Chartered mark the first penalties related to its currency trading and sales business. Despite this, the bank has had previous encounters with US authorities. Regulatory bodies, including the US Department of Justice, are seeking fines of approximately $1.5 billion over alleged sanctions breaches involving Iran-based clients of its Dubai branch. A spokesperson for the bank clarified that the FX-related fine is "unrelated to the ongoing sanctions investigation."

The spokesperson further added, "Since the conduct at issue took place, Standard Chartered has remediated its systems and controls, and now has an appropriate control framework in place."