By John Kennedy
Law360, New York (July 31, 2015, 8:12 PM ET) — Four foreign banks have been added as defendants to a class action that claims a number of banks orchestrated a conspiracy to rig the foreign exchange market, class counsel Scott & Scott LLP told a New York federal court on Friday.
Canada’s RBC Capital Markets LLC, France’s Societe Generale SA and Britain’s Standard Chartered PLC – bring the total to 16 banks accused of market manipulation, Scott & Scott’s amended complaint claims. The firm said that cooperation by certain defendants who have already settled allowed them to expand the complaint and allege a broader conspiracy.
“Our complaint makes clear that the conspiracy to manipulate the FX market was long-running and pervasive,” David R. Scott, managing partner of Scott & Scott, said in a statement. “We hope that our new complaint helps to rid this market of unlawful and harmful manipulation.”
Specifically, the complaint alleges that from as early as 2003 and through 2013, the banks used multiple online chat rooms – with names like “The Cartel,” “The Bandits’ Club” and “The Mafia” – to communicate in code to avoid detection.
“Being a member of certain chatrooms was by invitation only, indicating the secret nature of this conduct,” the complaint says, adding that the chat rooms “replaced the classic smoke-filled backrooms of the past.”
The banks are accused of fixing prices by agreeing to widen the difference between the prices at which they buy currency and at which they sell currency, manipulating benchmark rates and exchanging confidential customer information in an effort to trigger client stop-loss and limit orders, Scott & Scott said.
This year, there have been four settlements, all of which included cooperation agreements. JPMorgan Chase & Co. and JPM Chase Bank NA agreed to pay $99.5 million in January; UBS AG, UBS Group AG and UBS Securities LLC settled for $135 million in March; Bank of America Corp. and Bank of America NA agreed to pay $180 million in April; and Citigroup Inc. and Citibank NA were required to pay $394 million in May.
All except Bank of America were part of a broader, $5.6 billion settlement with U.S. and U.K. authorities in May.
The results of cooperation were hinted at in mid-June, when the plaintiffs told U.S. District Judge Lorna G. Schofield that the alleged rigging of the forex markets went on all day, not just at the close as had originally been claimed.
Two weeks ago, Scott & Scott and Hausfeld LLP said they should be allowed to fold in recently unveiled allegations that the forex manipulation went deeper than originally suspected, saying that several firms have filed the new charges and have agreed upon the need to consolidate them.
Both firms are hoping to be appointed co-lead counsel to any newly consolidated claims as they are leading the current suits.
The class’s expert in litigation over foreign exchange market manipulation told the court in June that damages could reach well into the “hundreds of millions of dollars” and surpass that if new claims get the green light.
The defendants could not be reached for comment Friday.
The plaintiffs are represented by David R. Scott, Christopher M. Burke, Kristen M. Anderson, Sylvia M. Sokol, Walter W. Noss and William C. Fredericks of Scott & Scott and Michael D. Hausfeld, William P. Butterfield, Reena A. Gambhir, Timothy S. Kearns and Nathaniel C. Giddings of Hausfeld LLP.
Counsel information for the four newly-added banks was unavailable Friday.