September 2015 Newsletter


Scott+Scott Files Second Amended Complaint in FX Antitrust Litigation Alleging Broader Conspiracy

U.K.’s Serious Fraud Office Secures Libor Manipulation Conviction

Delaware Legislature Prohibits Public Corporations from Shifting Legal Fees on to Shareholders

Whistleblower Anti Retaliation Act

Conferences and Educational Seminars


Scott+Scott Files Second Amended Complaint in FX Antitrust Litigation Alleging Broader Conspiracy


Scott+Scott, Attorneys at Law, LLP filed a Second Consolidated Amended Class Action Complaint on behalf a proposed class in In re Foreign Exchange Benchmark Rates Antitrust Litigation, Case No. 1:13-cv-7789 (S.D.N.Y.).  When the original complaint was filed in November 2013, plaintiffs alleged that since 2003, financial institutions had conspired to manipulate the WM/Reuters Closing Spot Rates in the $5.4 trillion-per-day foreign exchange market.


As a result of cooperation obtained from certain settling Defendants, the complaint now alleges a broader conspiracy – one that affected dozens of currency pairs, including the seven pairs with the highest market volume, and impacted trading both over the counter and on exchanges.  More specifically, the Complaint alleges that from as early as 2003 and continuing through 2013, the world’s major banks used multiple chat rooms – with names such as “The Cartel,” “The Bandits’ Club,” and “The Mafia” – to communicate with each other.  As the Complaint explains, “[b]eing a member of certain chat rooms was by invitation only, indicating the secret nature of this conduct.  These electronic chat rooms replaced the classic, smoke-filled backrooms of the past.”  In these chat rooms, defendants used code words to avoid detection.


The plaintiffs allege that defendants manipulated the FX market in at least three separate respects.  First, defendants fixed prices by agreeing to widen bid/ask spreads on FX spot trades.  Bid/ask spreads represent the difference between the price at which a bank will buy a currency and the price at which it will sell it, and are a source of profit for banks.  As the Complaint describes, “there are thousands of communications involving multiple Defendants reflecting discussions about FX spreads.”  It goes on to explain that “[t]hese communications show traders at more than 30 banks, including Defendants, participated in interbank chats where traders coordinated and exchanged information about spreads or customer orders.”


Second, plaintiffs allege that defendants manipulated FX benchmark rates, including the WM/Reuters Closing Spot Rates and European Central Bank’s FX Reference Rates, as well as CME/Emerging Markets Traders Association Russian ruble/U.S. dollar rates.  As the new Complaint explains “[c]hat room communications demonstrate Defendants exchanged confidential customer information and coordinated their trading to manipulate these key rates.”


Finally, defendants exchanged key confidential customer information in an effort to trigger client stop loss and limit orders.  They exploited these types of orders by manipulating prices to move the market to levels that triggered the stop-loss or limit orders.


In addition to adding broader allegations of unlawful behavior, the Complaint accuses four defendants that were not previously named.  Bank of Tokyo-Mitsubishi UFJ Ltd., RBC Capital Markets, LLC, Société Générale S.A., and Standard Chartered plc, have been added to the list of banks that the Complaint alleges conspired to manipulate the FX market, bringing the total number of defendants to sixteen.


“Our complaint makes clear that the conspiracy to manipulate the FX market was long-running and pervasive,” commented David R. Scott, Managing Partner of Scott+Scott.  He added, “we hope that that our new complaint helps to rid this market of unlawful and harmful manipulation.”


The new Complaint follows four settlements that Scott+Scott previously announced, all of which included cooperation provisions as well as monetary relief.  In May 2015, Scott+Scott announced a settlement with Citigroup Inc. and Citibank, N.A. that requires it to pay $394 million, while also providing cooperation to the plaintiffs in their prosecution of claims against the remaining defendants.  In April 2015, Scott+Scott announced a settlement with Bank of America Corporation and Bank of America, N.A. that includes $180 million in monetary relief and cooperation.  In March 2015, Scott+Scott announced that it had reached a settlement with UBS AG, UBS Group AG, and UBS Securities LLC for $135 million, in addition to their cooperation.  In January 2015, the firm announced a settlement with JPMorgan Chase & Co. and JPM Chase Bank, N.A. for $99.5 million, in addition to their cooperation.  All told, the settlements disclosed to date amount to $808,500,000.


Scott+Scott, an internationally recognized law firm, prosecutes high-stakes antitrust and securities lawsuits throughout the United States on behalf of institutional investors, businesses, and corporations.  It has offices in New York, California, Connecticut, and Ohio, and the firm recently announced the opening of its first European office in London.


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U.K.’s Serious Fraud Office Secures Libor Manipulation Conviction

On August 3, 2015, former bank trader Tom Hayes was sentenced to 14 years in prison after a London jury convicted him of trying to fraudulently rig the London interbank offered rate, or Libor.  Over the last four years, the U.S. government and its counterparts in Europe and Asia have unearthed information indicating that the largest banks in the world manipulated Libor, the Euro Interbank Offered Rate (Euribor), and the Tokyo Interbank Offered Rate (Tibor).  These rates are benchmarks used in countless financial instruments, including from asset-backed securities to interest rate swaps.

Before and after the financial crisis, banks would communicate with each other and discuss what rates to submit.  This conduct was improper because, even within any given bank, the bank’s trading operations are not allowed to contact the department responsible for their panel submissions.  The investigations found instances where the banks engaged in such misconduct for their own benefit on trades, at the expense of their counterparties.  In addition, the investigations also found that during the height of the financial crisis, panel banks made artificially low submissions.  It appears that the motivation for doing so was to present a better financial condition than was actually the case.  In other words, if a bank reported that it had to pay a high interest rate to borrow money, this would signal that the bank had poor credit and might cause investors and lenders to stop doing business with the bank.

The U.K.’s Serious Fraud Office (“SFO”) brought the case against Hayes and described the Libor prosecutions as a priority and key proving ground for the agency.  U.S. and British authorities portrayed Hayes as the ringleader of an international scheme to skew the Libor benchmark.  The judge, Jeremy Cooke, called Hayes “the hub of the conspiracy.” 

Hayes moved to Tokyo with UBS in 2006.  He generated hundreds of millions of dollars in revenue for UBS by trading  interest rate swaps.  He joined Citigroup in late 2009.  In September 2010, Citigroup fired Hayes for Libor manipulation.  At the time, Hayes told Citigroup that he denied wrongdoing, partly because his bosses knew about and participated in what he was doing.  In 2013, Hayes agreed to cooperate with the SFO, to plead guilty, and to testify against his alleged co-conspirators.  As part of the process, Hayes gave 82 hours of taped interviews to the SFO investigators in which he repeatedly admitted that he acted dishonestly.  Hayes subsequently pulled out of the SFO process and decided to fight the legal proceedings against him.  Hayes now says he never actually considered himself to be guilty but instead was trying to avoid extradition to the U.S., where the Justice Department charged him with similar crimes in December 2012. 

The trial ran for nine weeks and the 12-person jury, after deliberating for more than a week, unanimously convicted Hayes on eight counts of conspiring to defraud.  Shortly thereafter the Judge sentenced Hayes to 14 years in prison.  Judge Cooke said he was imposing the stiffer-than-expected sentence “to send a signal” to the banking industry.  “Probity and honesty are essential, as is trust,” he said to Hayes when announcing the sentence.  “The Libor activities in which you took part put all that in jeopardy.”

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Delaware Legislature Prohibits Public Corporations from Shifting Legal Fees on to Shareholders


On June 24, 2015, Governor Jack Markell of Delaware signed into law a bill banning public companies from creating bylaws that shift the cost of legal action onto “losing” shareholders.  The bill allows shareholders to bring derivative actions to recover against the wrongdoing of corporate directors and officers without risking the possible penalty of paying the corporation’s legal fees.  This prevents corporations from punishing shareholders for attempting to enforce their rights.  The bill passed with resounding support in the legislature.  The Delaware State Senate voted in favor of the bill 16-5, while the Delaware house passed the bill unanimously.


Corporate governance groups such as the Council of Institutional Investors backed the new law, stating “fee-shifting bylaws create prohibitively high hurdles for shareholders to pursue litigation for meritorious claims.”  As shareholder suits are typically brought to enforce the rights of all shareholders, few individual shareholders are willing to shoulder the risk of enforcing the rights of the group.  The possibility that a corporation’s bylaws would require individual shareholders to pay the corporation’s legal fees would have further disincentivized shareholders from enforcing their rights.  Fee-shifting, as the Delaware legislature recognized, carries the risk of unduly restricting a shareholder’s ability to demand accountability and responsible corporate governance.


This bill was necessitated by a May 8, 2014 decision from the Delaware Supreme Court, which ruled in ATP Tour Inc. v. Deutscher Tennis Bund that fee-shifting provisions within non-stock corporations’ bylaws could be enforceable.  In that case, ATP Tour’s bylaws forced any member of the non-stock corporation who brought suit against the corporation, its members, or its directors to pay all defendants’ legal fees if the member did not fully prevail.


The Court’s ruling raised the issue of whether similar provisions could be written into the bylaws of publicly traded corporations.  Less than a year after ATP Tour was decided, over 30 public corporations implemented fee-shifting provisions in their bylaws, and an additional six new corporations included fee-shifting bylaws as part of their initial public offerings. 


The bill, introduced by state Senator Bryan Townsend, also addresses the danger that the elimination of fee-shifting provisions could lead to frivolous claims.  Senator Townsend solicited support for the bill by seeking to prohibit the “really aggressive” trend toward fee-shifting, but also included language confirming Delaware corporations’ right to adopt forum-selection clauses.  The bill confirms Delaware corporations’ right to establish Delaware as the exclusive forum for all shareholder litigation.


Without legislative action, the Court’s ruling was likely to have a dramatic effect on the ability of a shareholder to enforce his or her rights in Delaware courts.  Senator Townsend’s bill provides much-needed clarification to the Delaware judiciary with respect to the proper bounds of important fee-shifting and forum selection clauses available to Delaware corporations under the Delaware General Corporation Law. 


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Whistleblower Anti Retaliation Act


Following prior recommendations from the Government Accountability Office, as well as recent judicial trends interpreting broader protections for federal whistleblowers, on July 22, 2015, the United States Senate passed the Criminal Antitrust Anti-Retaliation Act (the “Anti-Retaliation Act”).  The bipartisan Anti-Retaliation Act was sponsored by Senator Patrick Leahy (D-Vermont) and Senator Chuck Grassley (R-Iowa) as an amendment to the existing Antitrust Criminal Penalty Enhancement and Reform Act (ACPERA). Given the bipartisan origins of the bill, the Anti-Retaliation Act passed in the Senate with unanimous consent.  The Anti-Retaliation Act will now go before the United States House of Representatives for a vote before being presented to the President to be signed into law.


Assuming that the Anti-Retaliation Act is enacted, it will further expand on the protections afforded by ACPERA to federal whistleblowers, particularly with regard to antitrust tipsters.  Specifically, the Anti-Retaliation Act addresses critics of ACPERA who argue that the existing federal protections for antitrust whistleblowers who report corporate fraud or wrongdoing were not comprehensive enough.  Those critics had urged lawmakers to provide more robust protections to antitrust whistleblowers in light of the very real possibility that an employee reporting corporate malfeasance could face corporate backlash and suffer irreparable harm to their current and future career prospects.


The Anti-Retaliation Act is designed to extend protections to whistleblowers by preventing an employer from suspending, demoting, terminating, harassing, or otherwise discriminating against an employee who reports unlawful antitrust conduct of an employer to the federal government.  The Anti-Retaliation Act stipulates that whistleblowers who are retaliated against by an employer can file a claim with the Department of Labor, and the Anti-Retaliation Act also provides a fast track de novo review of their retaliation claim by a jury in federal court.  In the event that the Department of Labor finds that an employer did indeed retaliate against an employee who reported wrongdoing, the Anti-Retaliation Act allows for immediate reinstatement of the whistleblower and provides for the collection of back pay, special damages, attorney fees, and costs.  The Anti-Retaliation Act does not allow for a whistleblower that is part of any wrongdoing to avail themselves of these protections, and requires clean hands on the part of the whistleblower.


The protections that the Anti-Retaliation Act seeks to enact are necessary to encourage employees who witness antitrust violations to come forward, which is often the only way that such crimes are discovered.  According to Stephen M. Kohn, the executive director of the National Whistleblower Center, “numerous studies have shown that employees are the first defense to prevent fraud.  Investigators rely heavily on insiders to protect the public interest and prevent illegal competitive practices.”  Consequently, the Anti-Retaliation Act simply provides a sense of security for potential whistleblowers and encourages them to come forward without fear of losing their job.  The sense of security that the Anti-Retaliation Act intends to produce is a “major step forward in plugging a loophole in the patchwork of whistleblower protection that currently exists,” says Kohn. 


The next step, according to pundits, is to provide more significant financial incentives to potential antitrust whistleblowers.  Those pundits argue that there are strong financial incentives for whistleblowers to come forward under existing SEC programs designed to encourage reporting of violations of securities laws, and that similar financial incentives are needed to encourage reporting of antitrust violations. 


However, the anti-retaliation protections that ACPERA and the Anti-Retaliation Act endeavor to provide are a good start and demonstrate the Government’s commitment to consumer protection, according to observers.  The Anti-Retaliation Act will now go before the House of Representatives, where it is expected to receive bipartisan support.  Once it becomes law, whistleblowers that report federal antitrust violations will have a much greater sense of security and a legislative shield to protect against retaliation by employers who violate the federal antitrust laws and seek retribution against employees who report such violations.


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September Events


Conferences and Educational Seminars


+August 30- September 2, 2015


New England States Government Finance Officers’ Association Conference

Sheraton Boston Hotel, Copley Place

Boston, Massachusetts


The New England States GFOA is the nation's first multi-state GFOA that is comprised of membership from each state in the region of Connecticut, Massachusetts, Rhode Island, Vermont, New Hampshire and Maine.   For nearly 70 years state and local finance officials along with private sector professionals have been collaborating  with each other to share solutions on common issues.  The NESGFOA has a proud legacy and is open to all in public service.



+September 13-15, 2015


Louisiana Association of Public Employees Retirement System (LAPERS)

New Orleans Marriott

New Orleans, Louisiana


Organized in 1985, the Louisiana Association of Public Employees’ Retirement System (LAPERS) is a nonpartisan, nonprofit organization that brings together individuals employed by state, statewide, and local public employees’ pension plans to exchange information, ideas, and experiences with others facing the same challenges.  By uniting Louisiana public retirement systems, LAPERS works for their common interests, monitors state and federal legislative activities, and enhances public pension fund management and administration by providing educational and informational services to its more than 347,000 members with 26bn in assets.


+September 13- 15, 2015


Native American Finance Officers’ Association Fall Finance and Tribal Economies Conference (NAFOA)

Westin Copley Place

Boston, Massachusetts


 NAFOA’s mission is to improve the quality of financial and business management of tribal governments and their business entities.  NAFOA advocates for tribes on issues affecting sovereignty and supports the development of Native American financial professionals.  NAFOA invests in Native American communities by building the next generation of Native American financial leaders through educational and networking opportunities in finance.  Board members are elected by the membership and serve staggered two-year terms.  Members of this governing board are volunteers who hold financial management positions within their organizations and are members of a federally recognized tribe.  Expert speakers will illustrate market relationships, policy effects, forecast the near- and long-term global trends, weigh in on tax reform, new accounting standards and offer ideas on governmental best practices for navigating outside influences and protecting Native American assets.



+September 13 - 16, 2015


Annual Texas Local Fire Fighters’ Retirement Act Pension Conference (TLFFRA)

TAMIU Convention Center

Laredo, Texas

During the Great Depression, the Texas Legislature created the Office of the Fire Fighters’ Pension Commissioner (FFPC) to protect the pensions of fire fighters throughout Texas. This legislative foresight resulted in a sound statutory framework and a strong partnership between the state of Texas and local communities in providing pension benefits to fire fighters and their families.  Through an annual conference fund administrators and boards of trustees are provided training by qualified entities in the fields of investment management, administration and fiduciary responsibilies.

+September 14-17, 2015


International Brotherhood of Electrical Workers Business Managers Membership Conference (IBEW)

The Paris Las Vegas Hotel

Las Vegas, Nevada


More than 1,300 IBEW delegates attended last year’s conference which could effectively expose participating organizations to the leaders of more than 700,000 IBEW members. This is the largest annual networking event with decision makers and industry leaders of the IBEW who value the USA service providers.  This year’s program agenda will be innovative, dynamic and somewhat controversial as the election approaches.



+September  15 - 17, 2015


37th Kentucky Labor - Management Conference-35th Anniversary

Kentucky Dam Village State Resort Park

Gilbertsville, Kentucky


Established in 1977, the conference is governed by a Board of Directors and co-sponsored by the Kentucky Labor Cabinet and the Kentucky Cabinet for Economic Development.  The Kentucky Labor-Management Conference serves as the centerpiece of the state's effort to promote labor-management cooperation as an enhancement to economic development.  The event provides participants a relaxed atmosphere, apart from the work environment, that is conducive to positive, meaningful dialogue between labor and management.  The conference begins with two days of interactive educational opportunities in which the participants are given the chance to talk directly with the presenters on a wide variety of topics of mutual interest to labor and management.



+September 20-24, 2015



Georgia Association of Public Pension Trustees (GAPPT)

Hyatt Regency Conference Center

Savannah, Georgia


In the summer of 2009 administrators and trustees of several of the public pension plans in Georgia gathered together to form an association to provide a forum for support and information for education, training, advancement and accreditation for public plan trustees and personnel.  GAPPT is a non-profit association formed solely to promote and support the education and development of the Trustees and Administrators of Georgia’s Public Pension Plans in the areas of: fiduciary responsibility and liability, board governance, investment acumen,  and plan administration.



+September 24, 2015


National Association of Securities Professionals (NASP)

Hotel Monaco

Baltimore, MD


“The National Association of Securities Professionals is the premier organization that assists people of color and women achieve inclusion in the financial services industry.  NASP is headquartered in Washington, D.C.  and currently has 10 local chapters  throughout the United States. NASP was founded in Chicago in 1985 by Maynard H. Jackson, Felicia Flowers-Smith, Joyce M. Johnson & Donald Davidson.  From a core group of 44 people it has grown to more than 500 members.”



+September 28-30, 2015


The 20th Annual Institutional Investment Conference - Investment Trends Summit produced by OPAL

Financial Group

The Four Seasons, The Biltmore

Santa Barbara, California


This year’s conference will serve as an educational forum focused on analyzing trends for the future, as well as exploring ways to implement new strategies in particular investment plans.  In this period of dynamic change it is more important than ever to stay abreast of future investment opportunities and winning strategies, upcoming regulation and asset allocation plans from leading allocators, out-performing managers and industry experts.  Speakers from across the globe will present during the 3 day conference.



+September 26-29, 2015


Michigan Association of Public Employees Retirement System (MAPERS)

Grand Traverse Resort and Conference Center

Acme, Michigan


The Michigan Association of Public Employee Retirement Systems is recognized as the principal educational and legislative forum for trustees, plan administrators, and other retirement and financial professionals in the State of Michigan.  MAPERS was established to provide educational training and legislative updates to trustees of Public Employee Retirement Systems within the State of Michigan. MAPERS employs the service of a full-time professional lobbyist (Capitol Services, Inc.) to monitor legislation that may affect the more than 670,000 members and retirees of public pension plans in the State of Michigan.  This outstanding conference is geared toward educating local pension board members and administrators.



+September 30 – October 2, 2015


Council of Institutional Investors (CII) 2015 Fall Meeting

Westin Copley Place

Boston, Massachusetts


The Council of Institutional Investors is “the voice of corporate governance.”  As a nonprofit association of public, union and corporate pension funds.  Member funds are long-term shareowners with a duty to protect the retirement assets of millions of American workers.  The annual meeting will educate members, policymakers and the public about good corporate governance, shareowner rights and related investment issues. 


Government Finance Officers’ Association Conferences


+September 7-9, 2014

Illinois GFOA Annual 2015 Conference

Springfield Hilton

Springfield, Illinois


+September 9-11, 2015

Wyoming Association of Municipal Clerks and Treasurers Annual Conference

The Inn at Landing

Landing, Wyoming


+September 15-18, 2015

Washington Finance Officers Association

Greater Tacoma Convention and Trade Center                             

Yakima, Washington


+September 16-18, 2015

Officers of New Jersey GFOA Annual Meeting

Atlantic City Sheraton Hotel

Atlantic City, New Jersey


+September 16-18, 2015

Idaho City Clerks, Treasurers & Finance Officers Association (ICCTFOA)

The Riverside Hotel and Conference Center

Boise, Idaho


+September 23-25, 2015

League of Nebraska Municipalities Annual Conference

Cornhusker Marriott Hotel

Lincoln, Nebraska


+September 24-25, 2015

Officers of Wisconsin GFOA Annual Meeting

The Olympia Resort

Oconomowoc, Wisconsin


+September 24-25, 2015

North Dakota League of Cities Annual Conference

Holiday Inn

Fargo, North Dakota


+September 22-24, 2015

Oklahoma Municipal League Annual Conference

Tulsa Convention Center

Tulsa, Oklahoma


+September 23-25, 2015

Minnesota GFOA Annual Conference

Arrowwood Resort

Alexandria, Minnesota


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Scott + Scott LLP is a nationally recognized law firm headquartered inConnecticut with offices in New York City, Ohio and California. The firm represents individual as well as institutional investors who have suffered from corporate stock fraud. Scott+Scott has participated in recovering billions of dollars and achieved precedent-setting reforms in corporate governance on behalf of its clients. In addition to being involved in complex shareholder securities and corporate governance actions, Scott+Scott also has a significant national practice in antitrust, ERISA, consumer, civil rights and human rights litigation. Through its efforts, Scott+Scott promotes corporate social responsibility.

Scott+Scott’s PT+SM System is the firm’s proprietary investment portfolio tracking service. Carefully combining the firm’s proprietary computer-based portfolio monitoring software with Scott+Scott’s hands-on approach to client  relations is a proven method for institutional investors and their trustees to successfully

  • Monitor their investment portfolios  
  • Identify losses arising from corporate fraud    
  • Consider what level of participation any given situation requires   
  • Recover funds obtained on their behalf through investor litigation action  

To obtain more information about Scott+Scott’s PT+SM services or to schedulea presentation to fund trustees, fund advisors or asset managers, please contact:    David R. Scott + Toll Free: 800.404.7770     email: + UK Tel: 0808.234.1396