Banking giants face class-action lawsuit

Hamilton fund leads fight against the alleged rigging of foreign currency markets

A Hamilton-based pension fund is leading a $1-billion court fight against some of the world’s largest financial institutions over an alleged decadelong conspiracy to rig foreign currency markets. The Labourers International Union of North America (LIUNA) Pension Fund is one of two lead plaintiffs in a proposed class-action lawsuit that follows in the wake of similar actions already settled in the U.S. and Europe.

The lawsuit has not yet been certified as a class action but the judge in the case has already approved settlements totalling $107 million that have been reached by the plaintiffs with 13 of the defendants, which include global banking giants such as Bank of America, Citibank, BNP Paribas, Barclays, HSBC, UBS and Goldman Sachs.

The settlements reached to date are reportedly the second-highest amount ever recovered in a Canadian case related to price fixing.

Royal Bank of Canada, Credit Suisse, Morgan Stanley and Deutsche Bank are the four defendants that have so far not agreed to settle.

Tens of thousands of Canadians could be eligible to participate in any eventual settlement, according to one of the lawyers representing plaintiffs in the case.

Proposed members of the class action include anyone who participated in a wide range of foreign exchange-related transactions either directly or indirectly through mutual funds, hedge funds, equity funds and pension funds between 2003 and the 2013.

The plaintiffs are seeking $1 billion in damages plus punitive damages.

“LIUNA is not only standing up for its members, as they always do, but they’re standing up on behalf of everyone who’s affected by this mis- conduct,” said Robert Gain, one of the lead lawyers for the plaintiffs.

LIUNA’s pension fund includes 20,000 pensioners and beneficiaries. The union represents about 100,000 workers and retirees in Canada.

“This is a global conspiracy to fix the price of currencies,” said Gain, who is with the Toronto-based Koskie Minsky law firm.

“That goes to the heart of a lot of financial instruments, it goes to the heart of the trust people have in the global banking system.”

The misconduct alleged in the Canadian lawsuit has already led to massive settlements and fines against some of the defendants elsewhere in the world.

Six of the major financial institutions were hit with a total of $4.3 billion (U.S.) in fines in 2014 for the attempted manipulation of foreign currency rates.

In just the U.S. alone, Citibank reached a $402-million (U.S.) settlement with American regulators as well as being hit with a $310-million (U.S.) fine.

Despite the massive fines levied against banks around the world, Gain said there are no similar investigations or enforcement actions being taken by Canadian authorities.

The Canadian class-action lawsuit alleges that the defendant banks conspired with each other over an 11-year period to manipulate more than two dozen currencies through a variety of means, such as fixing the price of bid and ask spreads and manipulating benchmark rates for currencies.

According to the allegations, the institutions used multiple chat rooms with names such as “The Cartel,” “The Bandits’ Club” and “The Mafia” to communicate with each other.

The lawsuit alleges the banks conspired to fix spot prices of the futures market, as well as exchanged confidential customer information that could be used to trigger certain trading reactions.

None of the allegations have been proven in court.