The European Commission on Thursday fined three financial institutions—Nomura, UBS, and UniCredit—a total of €371 million (U.S. $453 million) for their participation in a cartel scheme through a group of traders, in which four other banks were also involved.

Bank of America, Natixis, NatWest, and Portigon were each named in the enforcement action but not penalized. NatWest received immunity for revealing the existence of the cartel to the Commission, while Bank of America and Natixis got off because of their alleged involvement with the cartel taking place outside the limitation period for imposing fines.

Portigon, the legal and economic successor of WestLB, had a proposed fine of €4.9 million (U.S. $6 million) reduced to zero because fines cannot exceed 10 percent of total turnover. Portigon did not generate any net turnover in the last business year, the Commission noted.

The cartel scheme: According to the Commission, all seven banks participated in a cartel through a group of traders working on their European Government Bonds desks and operating in a “closed circle of trust.” These traders primarily contacted each other through multilateral chatrooms on Bloomberg terminals, where they exchanged commercially sensitive information.

“They informed and updated each other on their prices and volumes offered in the run up to the auctions and the prices shown to their customers or to the market in general,” the Commission stated in a press release. “They discussed and provided each other with recurring updates on their bidding strategy in the run up to the auctions of the Eurozone Member States when issuing Euro denominated bonds on the primary market and on trading parameters on the secondary market.”

The cartel scheme affected the entire European Economic Area (EEA) and partially took place during the financial crisis, between 2007 and 2011, according to the Commission.

The investigation started in July 2015 after NatWest (then-RBS) tipped off the Commission.

Fine breakdown: In setting the level of fines, the Commission said it “took into account, in particular, the sales value in the EEA achieved by the cartel participants for the products in question, the serious nature of the infringement, including that the cartel related to a Euro-based financial product on the primary and secondary market, its geographic scope, and the respective duration of participation.”

Despite a 45 percent reduction for cooperation, UBS still received the largest fine at €172.4 million (U.S. $210 million). Nomura was fined €129.6 million (U.S. $158 million), and UniCredit €69.4 million (U.S. $84.5 million).

NatWest would have been fined 260 million Canadian dollars (U.S. $215 million) had it not received immunity.

Compliance message: The fines demonstrate the European Commission “remains determined to deal with anticompetitive practices in all markets, including the financial sector.” In 2019, the Commission fined five banking giants a total of €1 billion for colluding in the trade of significant sums of foreign currency.

The case highlights the importance of locating and detecting suspicious behavior in compliance asset classes, says VoxSmart CEO Oliver Blower. “While firms have improved their surveillance capabilities in recent years, trader conversations are becoming increasing multidimensional,” he says.

“In an asset class as complex as fixed income, an increasing amount of financial jargon is used between traders across multiple instant messaging and social media channels, which makes it much harder for compliance teams to locate and detect suspicious behavior,” Blower says. “Unless a financial institution has full context into how and why a certain product was originated and traded, as well as robust data capture and processing capabilities, then they will only ever have half of the story.”