Scott+Scott Files New Class Action Complaint in Foreign Exchange Lawsuit

NEW YORK, July 31, 2015 (GLOBE NEWSWIRE) -- Scott+Scott, Attorneys at Law, LLP announces that it has filed a Second Consolidated Amended Class Action Complaint on behalf a proposed class in In re Foreign Exchange Benchmark Rates Antitrust Litigation, Case No. 1:13-cv-7789 (S.D.N.Y.).  When the original complaint was filed in November of 2013, plaintiffs alleged that since 2003, financial institutions had conspired to manipulate the WM/Reuters Closing Spot Rates in the $5.4 trillion-per-day foreign exchange market.

As a result of cooperation obtained from certain settling Defendants, the complaint now alleges a broader conspiracy – one that affected dozens of currency pairs, including the seven pairs with the highest market volume, and impacted trading both over the counter and on exchanges.  More specifically, the Complaint alleges that from as early as 2003 and continuing through 2013, the world’s major banks used multiple chat rooms – with names such as “The Cartel,” “The Bandits’ Club,” and “The Mafia” – to communicate with each other.  As the Complaint explains, “[b]eing a member of certain chat rooms was by invitation only, indicating the secret nature of this conduct.  These electronic chat rooms replaced the classic, smoke-filled backrooms of the past.”  In these chat rooms, defendants used code words to avoid detection.

The plaintiffs allege that defendants manipulated the FX market in at least three separate respects.  First, defendants fixed prices by agreeing to widen bid/ask spreads on FX spot trades.  Bid/ask spreads represent the difference between the price at which a bank will buy a currency and the price at which it will sell it, and are a source of profit for banks.  As the Complaint describes, “there are thousands of communications involving multiple Defendants reflecting discussions about FX spreads.”  It goes on to explain that “[t]hese communications show traders at more than 30 banks, including Defendants, participated in interbank chats where traders coordinated and exchanged information about spreads or customer orders.”

Second, plaintiffs allege that defendants manipulated FX benchmark rates, including the WM/Reuters Closing Spot Rates and European Central Bank’s FX Reference Rates, as well as CME/Emerging Markets Traders Association Russian ruble/U.S. dollar rates.  As the new Complaint explains “[c]hat room communications demonstrate Defendants exchanged confidential customer information and coordinated their trading to manipulate these key rates.”

Finally, defendants exchanged key confidential customer information in an effort to trigger client stop loss and limit orders.  They exploited these types of orders by manipulating prices to move the market to levels that triggered the stop-loss or limit orders.

In addition to adding broader allegations of unlawful behavior, the Complaint accuses four defendants that were not previously named.  Bank of Tokyo-Mitsubishi UFJ Ltd., RBC Capital Markets, LLC, Société Générale S.A., and Standard Chartered plc, have been added to the list of banks that the Complaint alleges conspired to manipulate the FX market, bringing the total number of defendants to sixteen.

“Our complaint makes clear that the conspiracy to manipulate the FX market was long-running and pervasive,” commented David R. Scott, Managing Partner of Scott+Scott.  He added, “we hope that that our new complaint helps to rid this market of unlawful and harmful manipulation.”

The new Complaint follows four settlements that Scott+Scott previously announced, all of which included cooperation provisions as well as monetary relief.  In May 2015, Scott+Scott announced a settlement with Citigroup Inc. and Citibank, N.A. that requires it to pay $394 million, while also providing cooperation to the plaintiffs in their prosecution of claims against the remaining defendants.  In April 2015, Scott+Scott announced a settlement with Bank of America Corporation and Bank of America, N.A. that includes $180 million in monetary relief and cooperation.  In March 2015, Scott+Scott announced that it had reached a settlement with UBS AG, UBS Group AG, and UBS Securities LLC for $135 million, in addition to their cooperation.  In January 2015, the firm announced a settlement with JPMorgan Chase & Co. and JPM Chase Bank, N.A. for $99.5 million, in addition to their cooperation.  All told, the settlements disclosed to date amount to $808,500,000.

Scott+Scott, an internationally recognized law firm, prosecutes high-stakes antitrust and securities lawsuits throughout the United States on behalf of institutional investors, businesses, and corporations.  It has offices in New York, California, Connecticut, and Ohio, and the firm recently announced the opening of its first European office in London.


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