Nine banks agree to $2 bn payment over forex rigging
14 August 2015
Nine banks have agreed to a $2 billion payment in settlements to US investors over claims they rigged foreign exchange rates, lawyers said.
The action was being taken on behalf of investors, including hedge funds and pension funds, who have accused banks of conspiring to manipulate rates.
Among the banks are HSBC, Barclays, BNP Paribas, Bank of America, JP Morgan, Citibank, Goldman Sachs, RBS and UBS.
According to lawyer Michael Hausfeld, this was only the start, BBC reported.
Seven other banks were also being pursued and Hausfeld added that the firm was also considering "concerted" action in London and Asia.
"While the recoveries here are tremendous, they are just the beginning," he said.
"Investors around the world should take note of the significant recoveries secured in the United States and recognize that these settlements cover a fraction of the world's largest financial market."
Traders used their banks' closed chat rooms, instant messaging systems and emails for manipulating prices.
"The Cartel," "The Bandits' Club," and "The Mafia" were some of the names assumed by traders to communicate and place confidential orders.
Several among the world's leading banks had coughed up hefty fines for fixing rates in the £5.5 trillion a day currency trading markets.
According to the lawyers, investors in the UK and Europe could now get a chance to launch lawsuits against lenders facing accusations of rigging financial markets.
Claims are still being pursued against Bank of Tokyo-Mitsubishi, RBC Capital Markets, Société Générale, Standard Chartered, Deutsche Bank, Credit Suisse and Morgan Stanley.
In addition to giving payments to the plaintiffs, the settling banks had also agreed to co-operate with the claimants, which, according to lawyers had opened up a trove of extra information which could be used in cases in the UK.
"We have been working on this case for several years, which has provided us with intimate knowledge of this conspiracy and the workings of the foreign exchange market, and that gives us a tremendous leg up in prosecuting the litigation against the non-settling banks," said David Scott, partner at law firm Scott and Scott which is one of the firms representing the claimants, The Telegraph reported.
"Our case is limited to the US right now, but I think it really shows that if and when we avail ourselves of the European judicial system, there should be an opportunity for non-US claimants to seek redress."
Citigroup Inc, the third-largest bank in the United States, said in a filing on Monday it could plead guilty to charges of rigging foreign currency markets to make quick profits. (See: Citigroup may plead guilty in rate-rigging case)