A new class action lawsuit for an alleged manipulation of foreign Exchange rates was filed on November 8th, in a U.S Federal District Court in Manhattan, New York, against Barclays, Citigroup, Credit Suisse, Deutsche Bank, JPMorgan Chase, Royal Bank of Scotland and UBS.
The plaintiff in this new suit is Simmtech Co. Ltd., a South Korean semiconductors and communication technology manufacturer. According to the suit, Simmtech claims that the alleged collusion of traders at the accused major banks distorted FX rates for the benefit of the banks and to the detriment of their clients and other traders in the global market.
This new class action came only a week after another suit was filed in November 1st. by complainant Haverhill Retirement System, a retirement fund for public sector employees in Massachusetts. The lawsuit claimed that a conspiracy involving the same seven major banks to manipulate the WM/Reuters FX rates has diminished the fund’s returns on FX trades, pension plans and savings accounts that follow global indices.
These class action lawsuits come in the wake of ongoing international investigations looking into allegations of FX manipulations by a group of major players in the financial markets. As Forex Magnates reported, the investigations focus on Bloomberg terminals chat groups with names such as ”The Cartel” and “The Bandits’ Club,” where bank traders allegedly shared information with their supposed competitors, allowing them to execute their own trades before filling client orders.
Regulators such as the U.K.’s Financial Conduct Authority and criminal investigation agencies, such as the U.S. Federal Bureau of Investigation, have announced that they are on the case. And last week, the U.S. Attorney General Eric Holder, commented on the investigation to the New York Times, saying: “The manipulation we've seen so far may just be the tip of the iceberg, we've recognized that this is potentially an extremely consequential investigation.”
John Rue, the lawyer representing Simmtech, was quoted by AFP saying that other South Korean firms may join the suit in the future. The two known class action suits against the seven major banks might prove to be just the first few rain drops of an approaching storm.
