BMO, TD can be added to lawsuit on foreign exchange ‘conspiracy’
Ontario appeal court reverses ruling, allowing banks’ inclusion in class action
A recent Ontario court decision has paved the way for Bank of Montreal and Toronto-Dominion Bank to be added to a lawsuit alleging a secretive “pricefixing conspiracy” in the foreign exchange market.
The June 13 decision at the Court of Appeal for Ontario overturned a lower court’s order from December 2017, which had dismissed a motion to include the two banks, as well as several of their subsidiaries, as defendants in an existing class action.
Also included in the appeal court decision were some of the accusations levelled against the banks in that class action. Associate Chief Justice Alexandra Hoy wrote that the lawsuit was launched against 16 groups of banks and their related entities in 2015, and that it alleged “a price-fixing conspiracy in the foreign exchange or foreign currency market between January 1, 2003 and December 31, 2013.”
“The statement of claim includes allegations that the defendants (including the proposed defendants) took active steps to conceal their participation in the conspiracy by, among other things, engaging in secret communications,” the decision said.
For the appeal court decision, however, the key issue was whether or not the claims against the banks were “statute-barred.” The Superior Court decision on the matter from 2017 said the two lenders claimed this was the case under Ontario’s Limitations Act, which states that “a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.”
Hoy wrote that the claim against BMO and TD would be statute-barred if it had been discovered before July 20, 2014. But the decision said the plaintiffs’ lawyers claimed they first learned of BMO and TD’s alleged involvement after Switzerland’s UBS — which settled without admitting wrongdoing — had co-operated as part of its settlement.
“Class counsel’s evidence on the motion was that they learned of BMO and TD’s involvement in the alleged conspiracy for the first time at the UBS proffer (on May 24, 2016),” the decision said. “UBS advised class counsel that it reviewed approximately 2,000 collusive chats dating as far back as 2008 and that FX traders at TD and BMO were among the persons participating in such chats.”
Hoy ordered that the plaintiffs, which include trustees of the Labourers’ Pension Fund of Central and Eastern Canada, should be allowed to amend their statement of claim to include the two banks as defendants.
Twelve of the groups of financial institutions have already reached settlements, according to a release from Koskie Minsky LLP, one of the law firms involved in the case. Those settlements did not include admissions of wrongdoing, but are valued at more than $100 million.
The plaintiffs had claimed damages of $1 billion plus punitive damages, the Superior Court judge wrote in 2017. The judge also noted those allegations included that the defendants used “multiple chat rooms with names such as ‘The Cartel,’ ‘The Bandits’ Club,’ and ‘The Mafia,’ ” to co-ordinate “fixing” of spot prices, among other accusations.
“The Defendants’ conspiracy affected dozens of currency pairs, including the U.S. and Canadian dollar (USD/CAD) currency pair, which is one of the world’s highest volume trading currency pairs,” alleged the Koskie Minsky press release.
Asked if the banks intended to appeal, a spokesperson for TD declined to comment as the matter is still before the court. As of Thursday morning, BMO had not provided any further comment on the decision.
Hoy wrote in the decision that the lenders are free to pursue their “limitation defence” in their statements of defence.