Big Banks Face Forex-Rigging Case in UK Class Action Suit

Five major banks, including JPMorgan Chase & Co and UBS Group AG, are facing criminal allegations of foreign exchange rigging in a new class action lawsuit worth more than one billion pounds.  That is the equivalent of $1.2 billion USD.

The other other banks named in the suit are Barclays Plc, Citigroup Inc, and Royal Bank of Scotland Group Plc.

According to the allegations, the UK-based suit will go towards paying pension funds, asset managers, hedge funds, and corporations that lost out because these banks participated in a market manipulation scheme that took place between 2007 and 2013.  Thus, the suit says, these parties should be compensated. 

More specifically, the lawsuit focuses on suspicious on collusion regarding foreign-exchange trading strategies.  The European Commission has already fined Barclays, Citigroup, JPMorgan, Mitsubishi UFJ Financial Group, and Royal Bank of Scotland 1.07 billion total Euros, in May. UBS managed to escape this fine as it was the first known to tell regulators about the collusion.  At the same time, Mitsubishi UFJ has not be listed in the civil case. 

Essentially, the foreign-exchange traders ran what equates to two cartels through online chatrooms. European regulators said that many of those who participated in the chatroom discussions knew eachother; in fact on chatroom had been referred to as “Essex Express n’ the Jimmy” because almost every trader had met on a commuter train between Essex and London.  The other three chat rooms carried the names “Three Way Banana Split” and “Semi Grumpy Old Men.”

What is perhaps more alarming, this case is just the latest development in a case that has already set in motion regulatory probes around the world. In turn, this already resulted in several billion dollars worth of fines, and also $2.3 billion in US settlements, last year.

The case was filed on Monday in the Competition Appeal Tribunal, in London, by Scott+Scott Europe.  The firms US arm—Scott+Scott Attorneys at Law LLP—led the class action suit that generated the original $2.3 billion in settlements.