Law360, New York (April 16, 2015, 8:41 AM ET) — Bank of America Corp. on Thursday became the third global bank to reach a settlement in an antitrust class action alleging that it was part of a conspiracy to rig the approximately $5 trillion-per-day foreign exchange market, attorneys for the plaintiffs announced.
Bank of America has become the third global bank to settle allegations that it conspired to rig the foreign exchange market. (Credit: Getty)
The plaintiffs did not reveal the amount that Bank of America agreed to pay as part of the deal, but the attorneys said that the Charlotte, North Carolina-based bank agreed to cooperate in their continuing investigation and litigation against nine remaining banks in federal district court in New York.
“This latest settlement sends a message to Wall Street banks that their long-standing practice of putting their own interests ahead of their customers in the foreign exchange market must end,” said David R. Scott, managing partner of Scott + Scott LLP, one of the lead firms in the case.
Bank of America declined to comment.
The settlement with Bank of America follows a $99.5 million deal with JPMorgan Chase & Co. in January and UBS AG’s March settlement for $135 million.
The other banks in the case, including Citigroup Inc., Barclays PLC, Goldman Sachs Group Inc., Morgan Stanley and Deutsche Bank AG, have faced the daunting prospect of fighting the case out after U.S. District Judge Lorna G. Schofield denied their motion to dismiss in January.
Judge Schofield rejected the bank’s claims that the U.S. plaintiffs failed to bring enough evidence of a potential conspiracy, finding that the facts laid out in the complaint, including the existence of chat rooms where traders “congratulated each other on the manipulation of ‘the Fix,'” were enough that discovery and trial were needed to determine their veracity. “The Fix” is an industry term for the median price of a widely traded currency 30 seconds before market close that sets the closing price for the day.
“Even the names the FX traders gave their chat rooms – such as ‘The Cartel,’ ‘The Bandits’ Club’ and ‘The Mafia’ – support the inference that the chat rooms were used for anti-competitive purposes,” Schofield wrote.
Citi and Barclays are rumored to be in settlement talks as well, and Bank of America’s settlement may provide more ammunition for the plaintiffs in their talks.
“The agreement ensures crucial cooperation that will assist victims in obtaining additional monetary relief from other financial institutions that took advantage of their clients,” said Scott + Scott partner Christopher M. Burke, the lead counsel for the plaintiffs
The plaintiffs, including the Louisiana Municipal Police Employees’ Retirement System, filed their complaint alleging rigging of the $5.4 trillion-per-day foreign exchange market in 2012. They alleged the banks routinely charged pension funds the worst possible forex rates when processing transactions on their behalf.
Other plaintiffs filed similar class action complaints. They were eventually consolidated in New York district court.
Buttressing the plaintiffs’ claims were a series of enforcement actions from U.S. and other regulators resulting in about $4.3 billion in fines against the banks.
Discovery in the class action has been stayed for six months as the U.S. Department of Justice continues its investigation into forex rigging.
The plaintiffs are represented by David R. Scott, Chris M. Burke, Kristen Anderson, Sylvia M. Sokol, Walter Noss, William Fredericks, Thomas Boardman and Donald A. Broggi of Scott & Scott LLP and Michael D. Hausfeld, William Butterfield, Reena Gambhir, Timothy Kearns, and Nathaniel Giddings of Hausfeld LLP.
Bank of America is represented by Adam S. Hakki, Richard F. Schwed and Jeffrey J. Resetarits of Shearman & Sterling LLP.
The case is In re: Foreign Exchange Benchmark Rates Antitrust Litigation, case number 1:13-cv-07789, in the U.S. District Court for the Southern District of New York.