The Competition Appeal Tribunal last week said that investors can proceed with class action suits against banks accused of unlawfully rigging forex markets over the period 2007-2013. Banks like Barclays, Citibank and JP Morgan, among others, have already been fined over €1bn for running FX trading cartels that exchanged commercially sensitive information and trading plans.
A collective proceedings application in UK courts brought by FX Claim UK has been certified by the CAT, but this can only move forward under an opt-in basis. Law firm Hausfield which represents FX Claim UK says it will appeal the ruling.
An original opt-out collective proceedings order was brought by Philip Evans, the special adviser for competition, consumer and trade policy at FIPRA (and formerly an inquiry chair at the UK’s Competition and Markets Authority). Evans is the prime mover behind FX Claim UK.
So far investors affected by the forex market rigging cartels, of which there were two in operating during this period, have not been compensated. This includes private traders as well as larger forex market participants like hedge funds and pension funds.
Investors should note that the CAT ruling was by no means unanimous. Tribunal member Paul Lomas, a former partner at law firm Freshfield Bruckhaus Deringer, felt that claims should be assessed on an opt-out basis only. He explained that he expected more than 40,000 potential proposed class members might not opt in, largely because they were not aware of the suit against the banks.
“If these claims are blocked from continuing on an opt-out basis, tens of thousands of individuals and businesses will be excluded from the opportunity to recover compensation in relation to admitted anti-competitive behaviour by the banks,” said Evans. “That would be contrary to the principle of access to justice that underpins the collective action regime.”
Evans said last week he planned to refer the case to the UK’s Court of Appeal.
More than one claim pursuing damages in UK
There are also some other competing claims against the banks in the forex rigging cartel. This includes one brought by Michael O’Higgins under the name FX Class Representative Limited. O’Higgins is the former chair of the UK Pensions Regulator.
According to the original European Commission findings, traders employed by the banks, who were involved in FX spot trading, had reached an underlying understanding to exchange, and had exchanged, current or forward-looking commercially sensitive information about their trading activities with respect to FX spot trading of through private, online chat rooms. The Commission also found that the information was shared on an extensive and recurrent basis and that, in addition, the traders occasionally coordinated their trading activities.
Lawyers for fund managers already suing the banks involved, including major asset managers like Allianz and hedge fund Brevan Howard, last year told a London court that the cartels were highly sophisticated, with traders using over 200 different chat rooms and that further anti-competitive practices at the banks could still come to light. US courts have already allowed institutional investors to pursue class-action lawsuits against 15 major banks.
Investors who feel they may have been affected and would like to participate in the claim can contact FX Claim UK here. Individual traders and investors who entered into FX spot and/or outright FX trades with members of the cartel during the period under review may be eligible.
