JPMorgan is one of five major banks hit with the class action, which will allege that they unlawfully manipulated the foreign exchange market in violation of competition laws. (AP)
The claim was filed on Monday at the Competition Appeal Tribunal in London by law firm Scott+Scott UK LLP. Citibank, Royal Bank of Scotland Group PLC and UBS AG are the other targets of the action, which will allege that the banks unlawfully manipulated the foreign exchange market between 2007 and 2013 in violation of competition laws.
The five lenders, along with Mitsubishi UFJ Financial, were found guilty by the European Commission, of anti-competitive behavior in May for their roles in foreign exchange trading cartels. The banks were hit with more than €1 billion ($1.1 billion) in fines: however UBS was spared a penalty for revealing the existence of the group to authorities. Mitsubishi UFJ Financial is not being targeted in the latest action.
The commission said the banks shared sensitive information and coordinated strategies in chat groups with names such as “Three Way Banana Split” and “Essex Express n’ the Jimmy.”
“The fines imposed on the banks by the European Commission were an important first step, but they will not compensate those who were damaged or suffered losses,” said Michael O’Higgins, the former chairman of Britain’s pensions regulator who is leading the action. “Just as compensation has been won in the U.S., our legal action in the U.K. will seek to return hundreds of millions of pounds to pension funds and other corporates who were targeted by the cartel.”
The collective action is being funded by Therium Capital Management, a global litigation funder. It aims to recoup losses suffered by pension funds outside the U.S., asset managers, insurance companies and multinational corporations because of alleged wrongdoing by the banks.
The class representative has also instructed a team of barristers from Brick Court Chambers, led by Daniel Jowell QC.
The fines handed out by the European Commission follow billions of dollars in penalties that government regulators have levied on major bankssince allegations of benchmark currency rate manipulation first surfaced in 2013. The scandal has cost the industry more than $11 billion in penalties.
RBS, JPMorgan and Citibank declined to comment. The other lenders did not immediately respond to requests for comment.
Scott + Scott led a U.S. class action against 15 banks including Barclays, RBS, Deutsche Bank and HSBC over their foreign exchange spot-trading activities. The lawsuit resulted in a $2.3 billion settlementlast year
“The FX class action in the U.S. led to widespread relief,” David Scott, managing partner of Scott+Scott, said. “Our experience with this litigation gives us a tremendous advantage in pursuing this case on behalf of victims in the U.K. and abroad so that they also receive fair and equitable compensation.”
Scott said the experience of O’Higgins in the pensions industry, which the banks had targeted, makes him “ideally placed” to run the class claim.
The suit is one of the first to be brought under the U.K.’s Consumer Rights Act, passed in 2015.
The act introduced the possibility of launching “opt-out” collective actions in alleged breaches of competition law. This allows groups that have been wronged in a similar way to recover losses without risk or expense. All affected U.K. entities are included in the claim under the opt-out system and are therefore able to claim from an aggregate pool of damages, Scott + Scott said.
Any U.K.-based business that entered into relevant foreign exchange transactions is automatically included in the suit, the law firm said. Investors based outside Britain — except those in the U.S., Canada and Australia — can opt in online.
–Editing by Ed Harris.