Regulation 

Barclays fine opens door to civil litigation: law firm

Barclays fine opens door to civil litigation: law firm

Yesterday’s (20 May) record fine against Barclays is likely to spark yet further civil litigation against the banks, a law firm has said, adding that it would be “surprising” if FTSE 100 firms have not looked into the merits of potential claims against the banks.

Simon Hart, banking litigation partner at City law firm RPC, said banks should brace themselves for claims, particularly from pension funds and other money managers that have suffered losses on foreign exchange trades as a result of market manipulation.

His comments came after yesterday (20 May) saw the Financial Conduct Authority slap a record UK regulatory fine of £284m on Barclays Bank for ‘failing to control business practices’ in relation to the manipulation of foreign exchange markets.

It is the largest financial penalty ever imposed by the FCA, or its predecessor the Financial Services Authority.

Mr Hart said: “Legally it will be much easier to bring a civil claim against a bank for forex manipulation than for Libor manipulation.

“The short term and one-off nature of forex trades means it will be far easier for firms to prove that they lost money on particular trades during a period one of these banks was manipulating the market.

“If a firm aggregates all those trades where losses were suffered, the numbers could well be significant. There is already a lot of work going on behind the scenes assessing how claims could be brought forward.”

Andy McGregor, banking litigation partner at RPC, added that it would be “surprising” if a large number of FTSE 100 companies have not already been investigating the merits and size of potential civil claims against the banks; if not, a large number certainly should be looking at claims.

He said: “Once one large corporate pursues litigation as a result of this settlement, other businesses are likely to feel compelled to consider bringing a claim on behalf of their shareholders. That could see the levee break in terms of industry wide litigation against the banks.

“Market participants will also be watching closely for the final settlement to see if it includes any admissions or evidence that they could use against the banks in a potential civil claim. The banks will have been negotiating the terms of the settlement for months to minimise giving a leg up to potential litigators.

“We’re still awaiting findings from the European Commission’s antitrust investigation, the results of which will likely open up the potential for further civil claims.”

emma.hughes@ft.com

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