US-based claimant law firm Hausfeld has filed a lawsuit in London against a raft of global banks for trying to manipulate foreign exchange rates. The new action, called FX Claim UK, mirrors a similar lawsuit brought by Scott & Scott, which could lead to a so-called carriage dispute, with the law firms competing to represent the class of affected entities.
The Competition Appeals Tribunal (CAT) heard the initial hearing of Hausfeld against the Royal Bank of Scotland, UBS, Barclays, Citigroup, and UBS. The five major banks have been already fined more than $8.5 billion by global regulators.
The lawsuit also mirrors US-style class actions, which have been popular means of litigation since they allow multiple parties to sue another under one banner. Since 2015, British courts were cleared to hear similar collective legal actions.
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The five global banks are facing a £1 billion ($1.3 billion) class-action lawsuit that seeks to compensate pension funds, asset managers, hedge funds, and corporations that lost out because these banks participated in a market manipulation scheme between 2007 and 2013. However, the total value of potential fines will depend on the number of forex trades executed in London, and the proportional impact of rate-rigging on GBP trades.
High-profile class actions
More specifically, the UK-based lawsuit alleges the banks in question acted in concert to manipulate either price for bids, offers, or spreads for currency spot trades. They are expected to lay out charges of illegal activities conducted by those banks before imposing fines, which can reach 10 percent of their global turnover.
Scott + Scott is representing the investors in the first lawsuit that was filed at the Competition Appeal Tribunal back in June. The firm’s US arm, which opened a European office to lead the UK claim, led the class action suit that generated the original $2.3 billion in settlements two years ago. Other banks have also faced huge fines for allowing their traders to club together to rig prices in FX markets.
It comes just months after the EU antitrust regulator fined seven major banks EUR 1.07 billion ($1.2 billion) for trying to manipulate foreign exchange rates in yet another settlement in a global probe into the $6-trillion-a-day market.