Law360: By Evan Weinberger
Law360, New York (January 30, 2015, 8:33 PM ET) — JPMorgan Chase & Co. will pay $99.5 million to exit an antitrust class action alleging the bank was part of a conspiracy to rig the approximately $5 trillion-per-day foreign exchange market, according to court documents filed Friday.
JPMorgan will pay $99 million to a group of pension funds, hedge funds and other investors plus $500,000 for administering the settlement fund under the deal and, crucially, has agreed to cooperate with investors as they press their case against other global banks named in the suit.
“This crucial first settlement offers victims not just monetary relief, but cooperation from JPMorgan that will support their claims against the remaining 11 major banks that entered into the long-running conspiracy to manipulate the FX market,” David R. Scott, the managing partner of Scott & Scott LLP, said in a statement.
Scott & Scott attorneys are co-lead counsel for the plaintiffs on the case, along with lawyers from Hausfeld LLP.
The plaintiffs first notified U.S. District Judge Lorna G. Schofield of federal district court in Manhattan that they had reached a settlement with JPMorgan in a Jan. 5 letter, but terms of the deal were kept confidential. JPMorgan’s $99.5 million payout was revealed in a motion to approve the deal filed Friday.
The New York-based bank is the first of the banks targeted in the class action, which also includes Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc., UBS AG and several other global banking giants. The suit alleges their traders engaged in a conspiracy to manipulate foreign exchange rates in violation of U.S. antitrust law.
Other banks may soon have to consider settling after Judge Schofield denied their motion to dismiss a complaint from U.S.-based investors alleging market manipulation on Wednesday.
The judge rejected the banks’ 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.
The plaintiffs, including the Louisiana Municipal Police Employees’ Retirement System, filed their complaint in 2012. They alleged the banks routinely charged pension fundsthe 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.
In its Friday settlement, JPMorgan gave the plaintiffs even more ammunition to go after the remaining bank defendants.
“This settlement is a significant early victory for the class, especially given the prominence of JPMorgan and their lawyers. We believe it will assist us in prosecuting this matter to a successful conclusion,” Christopher M. Burke, the head of Scott & Scott’s antitrust practice group, said in a statement.
JPMorgan could not immediately be reached for comment Friday.
JPMorgan is represented by Peter E. Greene of Skadden Arps Slate Meagher & Flom LLP.
The plaintiffs are represented by Michael D. Hausfeld of Hausfeld LLP and Christopher M. Burke of Scott & Scott 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.
–Editing by Kat Laskowski.