FX cartel UK class action case receives nod to proceed

The first foreign exchange class action suit brought forward in the UK against several banks involved in an FX cartel has been given the nod to proceed, after Competition Appeal Tribunal (CAT) justice Marcus Smith approved a timetable of hearings.

The conclusion of the first case-management conference (CMC), which took place on November 6 in London, saw a tentative schedule established.

A first hearing is due to take place in mid-February, to deal with objections to the funding arrangements of the suit, and another will potentially take place in June or July and deal with jurisdictional issues. Another CMC is programmed for October 2020, with a possible collective proceedings order (CPO) for January or February 2021.

“We are encouraged that the judge has set out a timetable to move things along so that affected entities, including pension funds, other asset managers and corporates, can finally seek the damages owed to them as a result of the cartel activity of these banks, which went on for several years and was discovered over five years ago,” said Michael O’Higgins, the class representative of the UK FX cartel claim.  

O’Higgins, chairman of the Local Pensions Partnership in the UK, filed the class action suit at the CAT on July 29, against Barclays, Citibank, JP Morgan, RBS and UBS, on behalf of market participants who fell victim to the banks’ activities in the two FX cartels.

The filing of the class action follows a €1.07 billion ($1.19 billion) fine imposed on Barclays, Citigroup, JP Morgan, Mitsubishi UFG Financial Group and RBS by the European Commission in May, for taking part in two FX cartels at various times between 2007 and 2013.

While UBS traders participated in both cartels, the bank was not fined because it exposed the cartels to the commission.

Individuals on the banks’ spot-trading desks involved in the cartels – ‘Three way banana split’ and ‘Essex Express’ – co-ordinated their trading strategies and exchanged client information and trading plans in online chatrooms. The information shared included amounts and currencies that clients wanted to trade, as well as bid/ask spreads and open-risk positions.

O’Higgins believes the class action could potentially return several billions of pounds in damages to market participants, given the proportion of FX transactions carried out by UK-domiciled organisations and the extent of the market manipulation.

The class action brought before the CAT is on an opt-out basis. This means all market participants domiciled in the UK who entered into relevant FX transactions between 2007 and 2013 with the banks that participated in the two cartels are automatically included in the suit.

Participants who entered into relevant FX transactions but are not domiciled in the UK – and are not domiciled in Australia, Canada or the US – can decide to opt in once the claim has been certified.