US settlements over forex rigging scandal opens door for UK lawsuits

Nine banks have paid a total of $9bn to investors in the US over claims they rigged foreign exchange markets, and their lawyers hope to launch similar lawsuits in London

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Banks accused of foreign exchange rate rigging have agreed to pay major penalties to investors Credit: Photo: REX

British and European investors could now get a chance to open lawsuits against banks accused of rigging financial markets, following a string of settlements in cases in the US, lawyers believe.

Another five major banks accused of foreign-exchange rigging have settled claims in a New York court with complainants, including pensions funds and institutional investors.

They join the four banks who settled earlier in the year, and the total payouts to investors now amount to more than $2bn (£1.28bn).

The settlement announced this week covers Barclays, Goldman Sachs, RBS, HSBC and BNP Paribas. The investors are still pursuing claims against Bank of Tokyo-Mitsubishi, RBC Capital Markets, Société Générale, Standard Chartered, Deutsche Bank, Credit Suisse and Morgan Stanley.

As well as giving payments to the plaintiffs, the settling banks have also agreed to co-operate with the claimants, which lawyers say has opened up a trove of extra information which could be used in cases in the UK.

"We have been working on this case for several years, which has provided us with intimate knowledge of this conspiracy and the workings of the foreign exchange market, and that gives us a tremendous leg up in prosecuting the litigation against the non-settling banks," said David Scott, partner at law firm Scott and Scott, which is one of the firms representing the claimants.

"Our case is limited to the US right now, but I think it really shows that if and when we avail ourselves of the European judicial system, there should be an opportunity for non-US claimants to seek redress."

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The cases in the US were brought under anti-trust rules, which limit the class action to US claimants. As London hosts the largest chunk of the foreign exchange markets, it is a leading candidate for future civil claims.

Scott and Scott is setting up a UK office and has hired a lawyer to run the practice, following enquiries from investors interested in pursuing cases related to the foreign exchange markets.

Law firm Hausfeld also represented investors, and in a statement said that the agreements were preliminary and must still be approved by US District Judge Lorna Schofield.

In June, sources close to the situation reported that Barclays would pay $375m, HSBC $285m, BNP Paribas nearly $100m and Goldman Sachs about $130m. But they also specified that the amounts were subject to change.

Some of the banks in Thursday's announcement had already agreed to specific sums.

US banking giant JPMorgan Chase agreed to pay $99.5m in January, followed by Bank of America at $180m, Citigroup at $394m and Swiss UBS at $135m.

Thursday's agreements are distinct from proceedings led by US and British regulators, which in May ordered $6bn in fines on six major banks - Barclays, JPMorgan Chase, Citigroup, Royal Bank of Scotland, UBS and Bank of America - for rigging foreign exchange market and Libor interest rates.

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Barclays, JPMorgan Chase, Citigroup and the Royal Bank of Scotland all pleaded guilty to US Justice Department charges of conspiring to manipulate the massive currency market.

"While the recoveries here are tremendous, they are just the beginning," said Hausfeld chairman Michael Hausfeld.

"Investors around the world should take note of the significant recoveries secured in the United States and recognize that these settlements cover a fraction of the world's largest financial market," he said.

The firm also noted that it was considering "concerted action" in London.