On Aug. 31, 2016, Plaintiffs filed their proposal to distribute the $2 billion foreign exchange manipulation settlement among aggrieved investors. This settlement was reached with nine banks – JPMorgan Chase, Citigroup, Barclays PLC, HSBC Holdings PLC, The Royal Bank of Scotland PLC, Goldman Sachs Group Inc., BNP Paribas SA, UBS AG, and Bank of America Corp. – and arises from litigation alleging that these entities (and others) engaged in a broad scheme to rig the $6 trillion foreign exchange market.
According to the complaint, filed in 2013, traders at the banks colluded to manipulate the global standard WM/Reuters Rates used to determine exchange rates for 158 different currencies. The WM/Reuters Rates are employed extensively in the operation of financial markets for uses such as valuing portfolios and funds that track global indexes and as a benchmark for currencies in contracts.
Traders at the banks allegedly traded ahead of large client orders that were believed to move the market, thus permitting the banks to profit or avoid losses. The traders allegedly would manipulate the rates by pushing through a high number of low-volume trades in the one-minute period before the WM/Reuters Rates were calculated – a process known as “banging the close.” These trades could artificially increase or decrease an exchange rate by hundredths of a percent, and could result in approximately 100 basis point deviation from the day’s exchange rate. This resulted in profit for the banks at the expense of their customers.
Lawyers representing the Plaintiffs have filed a plan for settlement distribution in federal court in Manhattan. The proposal is subject to approval by U.S. District Judge Lorna G. Schofield, who is presiding over the case. The settlements included in the broad agreement were given preliminary approval by Judge Schofield in December of 2015.
These settlements account for some of the largest settlements ever in any antitrust case. Funds included in the settlement consist of JPMorgan’s agreement to pay $99.5 million; UBS AG’s, UBS Group AG’s, and UBS Securities LLC’s $135 million settlement; Bank of America Corp. and Bank of America NA’s $180 million settlement; Citigroup and Citibank NA’s required $394 million payment; Barclays $384 million settlement; HSBC Holdings’ agreement to pay $285 million; and BNP Paribas’ agreement to contribute $115 million to the settlement funds.
If the settlement gets final approval, which is expected, RBS will pay $255 million and Goldman Sachs will pay $134 million. Each of the class settlements also included a cooperation agreement, whereby the settling banks will cooperate in the prosecution of the action against the seven non-settling banks.
Barclays, Citigroup, JPMorgan, RBS, and UBS were also part of a broader, $5.6 billion settlement with U.S. and U.K. authorities in May 2015. Of those five banks, only UBS was able to avoid a guilty plea to criminal charges of alleged foreign exchange manipulation.
The distribution plan includes notice by mail to investors and publicity in national and international publications, all of which will direct investors to a website where they can submit claims. Lawyers will then evaluate claims made by individual investors and determine the amount that will be disbursed to them. Judge Schofield has given careful scrutiny to the proposed settlements, and has previously asked for details regarding damages to determine whether the $2 billion combined payout was enough to remedy the alleged violations.
But even if Judge Schofield provides final approval of the settlement, there is still lots more left to be done in this litigation. The Plaintiffs still have outstanding claims against Morgan Stanley, Credit Suisse AG, and Deutsche Bank AG, which were in the original group of banks that were sued. It appears these banks will continue to fight the class claims. Additionally, Japan’s Bank of Tokyo-Mitsubishi, Canada’s RBC Capital Markets LLC, France’s Societe Generale SA, and Britain’s Standard Chartered PLC were named as Defendants in July and have yet to settle the claims against them. We will report on all future developments of significance.
Sources: Law360.com and Dailyreportingsuite.com
Contact us today for a free legal consultation with an experienced attorney.
Fields marked *may be required for submission.
If you would like to subscribe to the Jere Beasley Report digital edition, simply visit our Subscriptions page and provide the necessary information or call us at 800-898-2034.
Attorney Advertising - Prior results do not guarantee a similar outcome.