Despite Wall Street’s hopes that by reaching settlements they can put the claims of scamming FX traders behind them, by agreeing to pay over $2 billion in the U.S last month the banks appear to have encouraged even more class action suits against them. Three Canadian law firms have just launched a $1 billion copycat suit in the Ontario Superior Court of Justice against a long list of local and international financial institutions.
The new lawsuit claims that the banks allegedly conspired “to fix, raise, maintain, stabilize, control, or enhance unreasonably the prices of currency purchased in the FX Market, and to fix, maintain, control, prevent, lessen, eliminate, or unduly lessen the supply of foreign currencies on the FX Market.” The Canadians further allege that the conspiracy impacted dozens of currency pairs, including the USD/CAD currency pair.
The list of defendants includes the Royal Bank of Canada, Bank of America Canada, Barclays Bank PLC, Deutsche Bank, Goldman Sachs & Co., HSBC Bank, JPMorgan Chase & Co., Royal Bank of Scotland and Credit Suisse.
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As with the U.S suit, the Canadian plaintiffs allege that the defendants communicated directly with one another in chat rooms with names such as ‘The Cartel’, ‘The Bandits’ Club’ and ‘The Mafia’ to coordinate: their fixing of spot prices, controlling or manipulating of FX benchmark rates, and exchanging of key confidential customer information in an effort to trigger client stop-loss orders and limit orders.
“The defendants engaged in additional collusive conduct,” say the court files. “The defendants exchanged information about the prices at which their respective customers had stop-loss orders and limit orders for the purpose of coordinating their trading to trigger these pricing thresholds. The defendants exploited these orders by controlling or manipulating prices to swing to the price at which the stop-loss or limit order is triggered.”
Kirk Baert, partner at Koskie Minsky and head of the firm’s class action group, commented: “The issues raised by this case are very troubling. A number of banks throughout the world have reached plea agreements with the U.S. Department of Justice or the EU. A number of others have settled similar class actions filed in the United States. This claim will make sure that Canadians who have been harmed will be properly compensated for any losses they may have suffered.”