A lawsuit lodged by major institutional investors against more than a dozen of the world’s biggest banks will proceed, a federal judge ruled Thursday, declining to throw out claims that the banks conspired to rig foreign exchange rates.
The antitrust lawsuit against 16 financial institutions, including Bank of America, JPMorgan Chase and Citigroup, was filed in November 2018 by nearly 1,300 investment firms and government entities, Allianz and BlackRock among them.
The banks had asked the judge to dismiss the plaintiffs’ claims that investors were harmed by doing business in the foreign exchange market while it was being distorted in the banks’ favor, beginning as early as 2003 and lasting through 2013.
The investors allege that the banks worked together to manipulate foreign exchange benchmark rates and also inflate bid/ask spreads so that investors paid artificially high prices to buy and received artificially low prices to sell. During the alleged conspiracy, the banks at times held a market share of more than 90%, the judge noted in her opinion.
Turnover in global foreign exchange markets is around $6.6 trillion per day, according to the Bank for International Settlements.
Judge Lorna G. Schofield of the U.S. District Court for the Southern District of New York did grant part of the banks’ motion. She dismissed SG Americas Securities from the case, and threw out some claims against Barclays PLC, JPMorgan Securities LLC and Royal Bank of Canada that she said were not timely.
The plaintiffs filed the suit after declining to join a 2013 class action case that Reuters reported resulted in $2.31 billion of settlements with most of the banks. By opting out, the investors could recover more damages through an independent lawsuit.
Some Allianz plaintiffs were dismissed on Thursday, however, based on a failure to opt out of the previous class action case.
The defendants named in the suit include Bank of America; Barclays; BNP Paribas; Citigroup; Credit Suisse; Deutsche Bank; Goldman Sachs; HSBC; JPMorgan Chase; Morgan Stanley; Royal Bank of Canada; Royal Bank of Scotland; Société Générale; Standard Chartered Bank; UBS; and various affiliates.
They argued in their motion that the investors failed to bring a plausible claim of injury — as opposed to a conceivable or speculative one — based on fact. But Schofield ruled in her 40-page decision that they were incorrect in their position that an antitrust injury requires pleading the “actual transactions” that caused investors harm.
“Here, the [c]omplaint plausibly alleges that [p]laintiffs traded to their detriment in currencies the prices of which were tied to artificially manipulated benchmark rates and bid/ask spreads,” she wrote. “This is an ‘injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendants' acts unlawful,’ and is therefore sufficient to establish antitrust injury.”
An attorney for the plaintiffs declined to comment.
Lawyers for some of the defendants did not respond to requests for comment.