Pension funds that have suffered losses on Forex trades as a result of market manipulation will probably take civil action, a senior City lawyer has said.
Simon Hart, banking litigation partner at City law firm RPC, was speaking after six banks were collectively fined $5.6bn (£3.5bn) over rigging foreign exchange markets.
Five banks - Citicorp, JPMorgan Chase & Co, Barclays, The Royal Bank of Scotland and UBS AG - agreed to plead guilty to felony charges brought by the US Department of Justice.
Together with Bank of America, which was not charged by the US Department of Justice, they also settled with the US Federal Reserve. Barclays was also fined £284m for its failure to adequately control its FX business
Mr Hart said this was unlikely to be the end of the matter, with the prospect of civil litigation.
He said: “Legally it will be much easier to bring a civil claim against a bank for Forex manipulation than for Libor manipulation. There is already a lot of work going on behind the scenes assessing how claims could be brought.”
Anthony Maton, managing partner at law firm Hausfeld (London), said: “Guilty pleas announced in the US are one side of this story. There is no doubt that anyone who traded FX in or through the London market has suffered significant loss as a result of the actions of the banks.”
| Bank | Total forex rigging fines to date |
| Barclays | £1,534m |
| HSBC | £216m |
| The Royal Bank of Scotland | £643m |
| JP Morgan Chase | £790m |
| Citicorp | £1,033m |
| Bank of America | £130m |
| UBS AG | £451m |
| Total | £4,797m |
Citicorp, JPMorgan Chase & Co, Barclays, and The Royal Bank of Scotland agreed to plead guilty to conspiring to manipulate the price of US dollars and Euros exchanged in the foreign currency exchange spot market and agreed to pay criminal fines of more than $2.5bn (£1.59bn).
UBS AG has agreed to plead guilty to manipulating the Libor and other benchmark interest rates and pay a $203m (£129m) criminal penalty.
According to the US Department of Justice, between December 2007 and January 2013, euro-dollar traders at Citicorp, JPMorgan, Barclays and RBS, calling themselves The Cartel, used an electronic chatroom and coded language to manipulate benchmark exchange rates.
Loretta Lynch, the US attorney general, said: “The penalty these banks will now pay is fitting considering the long-running and egregious nature of their anticompetitive conduct.
“It is commensurate with the pervasive harm done.”
Meanwhile, the Federal Reserve announced it was imposing fines of more than $1.8bn (£1.1bn) on the six banks.
In November the FCA fined Citibank, HSBC, JP Morgan Chase, The Royal Bank of Scotland and UBS AG £1.1bn for Forex manipulation.
Right of reply
Ross McEwan, RBS chief executive, said: “We are determined to learn the lessons from our past mistakes and to hold those responsible fully to account for their actions.”
Antony Jenkins, Barclays chief executive, said: “The misconduct at the core of these investigations is wholly incompatible with Barclays’ purpose and values and we deeply regret that it occurred. I share the frustration of shareholders and colleagues that some individuals have once more brought our company and industry into disrepute.”
Michael Corbat, chief executive of Citi, said, “The behavior that resulted in the settlements was an embarrassment to our firm, and stands in stark contrast to Citi’s values.”
Jamie Dimon, chairman and chief executive of JPMorgan Chase, said: “We demand and expect better of our people. The lesson here is that the conduct of a small group of employees, or of even a single employee, can reflect badly on all of us, and have significant ramifications for the entire firm.”
UBS chief executive Sergio Ermotti said: “The conduct of a small number of employees was unacceptable and we have taken appropriate disciplinary actions.”
