LAW 360: By Evan Weinberger
Law360, New York (March 13, 2015, 12:11 PM ET) — UBS AG on Friday agreed to a $135 million 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.
Along with paying $135 million, the Swiss banking giant also agreed to provide documents and other assistance to plaintiffs as they pursue claims against other banks. That clause in the settlement mirrors terms that JPMorgan Chase & Co. agreed to in a January settlement that saw it pay $99.5 million to exit the case.
“The class will not only obtain a substantial sum for their losses, but it will also receive unique and valuable cooperation from UBS, as it has from JPMorgan,” David Scott, the managing partner of Scott & Scott LLP, said in an emailed statement.
Scott & Scott attorneys are co-lead counsel for the plaintiffs on the case, along with lawyers from Hausfeld LLP.
UBS is the second of the banks targeted in the class action, which also includes Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc. and several other global banking giants, to settle the litigation. The suit alleges their traders engaged in a conspiracy to manipulate foreign exchange rates in violation of U.S. antitrust law.
The UBS settlement shows that pressure to settle the litigation is beginning to build on the banks.
“This also builds momentum toward further settlements while improving our litigation posture vis a vis the remaining defendants,” Scott said.
The pressure to settle first arose after Judge Lorna G. Schofield denied their motion to dismiss a complaint from U.S.-based investors alleging market manipulation in early January..
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 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.
UBS could not immediately be reached for comment Friday.
UBS is represented by Joel S. Sanders, Joshua H. Soven and Melanie L. Katsur of Gibson Dunn & Crutcher LLP.
The plaintiffs are represented by David R. Scott, Chris M. Burke, Kristen Anderson, Sylvia M. Sokol, Walter Noss, William Fredericks, Thomas Boardman of Scott & Scott LLP and Michael D. Hausfeld, William Butterfield, Reena Gambhir, Timothy Kearns, and Nathaniel Giddings of Hausfeld 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 Rebecca Flanagan.