09 November 2018

New wave of FX manipulation lawsuits

Investors tend to opt out of litigation if they expect to recover more by suing on their own

A group of large institutional investor plaintiffs filed a lawsuit on 07 November, in the US District Court in Manhattan, in a action linked to proce rigging in the FX markets. Amongst the several named plaintiffs are BlackRock Inc, Allianz SE's Pacific Investment Management Co., Norges Bank and the California State Teachers' Retirement System (CalSTRS). The plaintiffs are suing 16 major banks, accusing them of rigging prices in the approximately $5.1 trillion-a-day foreign exchange market. The U.S. pleadings indicate that some of of the plaintiffs also plan to pursue similar litigation in London in respect for trades in Europe. To date, regulatory probes into price rigging price in the foreign exchange market have led to in excess of $10 billion of fines for several banks, indictments of some traders and convictions for a number of traders.

Antitrust and conspiracy allegations

The plaintiffs are alleging that the banks of violated U.S. antitrust law by conspiring during the period 2003 to 2013 to rig currency benchmarks for their own benefit by sharing confidential orders and trading positions. The banks being sued are: Bank of America, Barclays, BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan Chase, Morgan Stanley, Japan's MUFG Bank, Royal Bank of Canada, Royal Bank of Scotland, Societe Generale, Standard Chartered and UBS. To date, regulatory probes into price rigging price in the foreign exchange market have led to in excess of $10 billion of fines for several banks, indictments of some traders and convictions for a number of traders.

Opt-out

The law firm Quinn Emanuel Urquhart & Sullivan represents the plaintiff investors. The plaintiffs have opted out of similar nationwide class-action litigation that has resulted in $2.31 billion of settlements with 15 of the 16 banks. Typically, such opt-outs occur when the plaintiffs anticipates recovering more by suing on their own.