Major banks seek summary judgment in FX benchmark rate fixing lawsuit
Some of the world’s biggest banks are seeking a summary judgment in their favor in an FX benchmark rate fixing lawsuit.
This becomes clear from documents filed with the New York Southern District Court on June 22, 2022. The document, seen by FX News Group, was signed by HSBC, Barclays, JPMorgan Chase, NatWest Markets, UBS, Bank of America, and Citigroup.
In this lawsuit, a putative class of consumers and end-user businesses allege that they paid inflated Forex rates caused by an alleged conspiracy among the defendant banks to fix prices of FX benchmark rates in violation of Section 1 of the Sherman Antitrust Act, 15 U.S.C. sec. 1 et seq.
The defendants propose to move for summary judgment on the grounds that, on the undisputed factual record in this case, the plaintiffs cannot meet their burden of proving (i) that the alleged conspiracy to manipulate foreign currency benchmark rates cause them injury-in-fact and (ii) the amount of any damages.
The claims in this case are limited to transactions “involving foreign currency purchased with U.S. Dollars and physically received at Defendants’ retail branches within the United States.” Plaintiffs claim that Defendants were part of a single conspiracy to fix the retail exchange rates of foreign currency purchased at Defendants’ retail branches within the U.S. from 2007 to 2013, in violation of Section 1 of the Sherman Act.
According to the banks, the sole factual basis for Plaintiffs’ allegations consists of plea agreements and government orders in which certain Defendants admitted to episodically attempting to eliminate competition around the WM Reuters London closing fix (the “WMR fix”), and the European Central Bank fix (the “ECB fix”).
As the Plea Agreements state, the “co-conspirators entered into and engaged in a combination and conspiracy to fix, stabilize, maintain, increase or decrease the price of, and rig bids and offers for, the Euro/USDollar (“EUR/USD”) currency pair exchange in the foreign currency exchange spot market (“FX SPOT MKT”) which began at least as early as December 2007 and continued until at least January 2013, by agreeing to eliminate competition in the purchase and sale of the EUR/USD pair in the United States and elsewhere in violation of the Sherman Act, 15 USC Section 1.”
The plaintiffs claim they were damaged each time they bought Euros for Dollars, or sold Euros for Dollars.
The case currently involves only four individual Plaintiffs and their travel businesses: John Nypl; Lisa McCarthy and her business Mad Travel, Inc., a.k.a. Travel Leaders; Valarie Jolly and her travel business Go Everywhere, Inc.; and William Rubinsohn d.b.a. Rubinsohn Travel.
Mr. Nypl and Mr. Rubinsohn testified that they did not purchase physical currency at a defendants’ retail branch within the U.S. during the relevant period. Ms. McCarthy testified that she purchased physical currency from defendant JPMorgan Chase, but does not recall when she made such purchases. Ms. Jolly testified that she purchased foreign currency from Chase, and produced several receipts purporting to show the dates and amounts of her purchases.
On the basis of these undisputed facts, the banks claim that the plaintiffs cannot show either (i) that Defendants’ alleged misconduct caused them injury-in-fact, or (ii) the amount of any damages they allegedly sustained.
The banks note that during the relevant period, Chase did not calculate the retail exchange rates for its branch customers based on the WMR or ECB fix benchmarks. Rather, it purchased the physical foreign currency it sold to branch customers from Bank of America, which based its own rates on daily market rates in New York between 6:00 and 7:00 am.
Accordingly, Plaintiffs cannot demonstrate “a direct relationship between the FX spot market prices and benchmark rates, which were the focus of the alleged conspiracy, and prices in the foreign currency end-user market, in which Plaintiffs participated.” Without such a showing, Plaintiffs fail to meet their burden to prove that “the end-user (i.e., consumer) retail foreign currency market in which Plaintiffs participated was directly restrained by Defendants’ alleged anticompetitive acts.”
Even if Chase’s retail rates were somehow impacted by the WMR or ECB fix benchmarks, neither Plaintiff can establish that, on a day when she purchased physical currency, the benchmark rate for euros was artificially inflated, let alone that any alleged inflation was a result of Defendants’ alleged misconduct.
Unable to determine whether Defendants’ alleged misconduct caused them harm on any particular date, Plaintiffs also cannot meet their burden to show the amount of their alleged damages, i.e., by how much Defendants’ alleged manipulation inflated the prices Plaintiffs paid for euros at Chase retail branches.
For these reasons, the banks conclude that the plaintiffs cannot meet their burden of proof on several critical elements of their claims, and summary judgment should be granted in favor of the defendants.