Banks settle for $16M in collusion lawsuit
Hundreds of thousands of Canadian investors may have been affected
In a case that could affect hundreds of thousands of retail investors in Canada, three major international banks accused of colluding to manipulate foreign exchange markets have settled a class-action lawsuit for almost $16 million.
As part of the settlement, Swiss bank UBS, French giant BNP-Paribas and Bank of America also pledged to provide information that could help pursue more than 40 other banks alleged to have profited from a conspiracy to push and pull foreign exchange rates for more than a decade.
“In addition to these very substantial financial settlements that these three settling defendants have agreed to pay, they all agreed to provide extremely valuable co-operation which will help the class achieve greater success against the remaining defendants,” said Robert Gain, one of the lawyers who brought the class action on behalf of Canadian investors.
AUBS spokesperson wrote that the bank “is pleased to have resolved the matter.”
Representatives from Bank of America and BNP-Paribas did not return requests for comment.
The lawsuit against the remaining banks, which is the first “benchmark rigging” case in Canada, seeks $1 billion in compensation.
The class action includes any investor who held mutual funds that included currency contracts called “FX Instruments” between 2003 and 2013. As these are common components of retail funds and pension plans, the lawsuit could affect hundreds of thousands of Canadians.
“A very large number of Canadians have been impacted by this conduct both directly, through their dealings with the banks, and indirectly, by having their investments affected by currency manipulation,” Gain said.
Traders at the banks are alleged to have participated in private chat rooms with names such as The Cartel, The Bandit’s Club and The Mafia, in order to discuss large trades that could affect exchange rates between currencies. By trading favours and providing insider information, the trades could be timed to take advantages of swings in the rates.
“The defendants created interbank chat rooms where they would improperly share confidential client information and proprietary bank trading information with the foreign exchange traders at other banks,” Gain said.
Securities and financial regulators in the U.S., U.K. and Switzerland have already ruled that UBS and Bank of America manipulated foreign exchange markets and didn’t properly supervise their traders. They were fined more than $1.7 billion (U.S.). Along with BNP-Paribas, each bank has agreed to pay more than $100 million to settle lawsuits in the United States. Courts in the U.K. convicted two Barclays bankers for their roles in the scandal.