Investors are mounting a legal challenge for compensation after foreign exchange traders at big banks were discovered fixing rates behind the scenes in online chat rooms.
Hiding behind names like ‘Three way banana split’, ‘Semi grumpy old men’ and ‘Essex Express’ chatted about sensitive information about rates and deals, said investigators for European Union regulators.
The traders even stood down to let rivals at other banks complete forex deals to their advantage without any interference that might push up prices.
The chatroom names were revealed when the EU issued fines adding up to £1 billion against five banks for colluding on forex rates.
Citigroup was fined £285 million; Royal Bank of Scotland was fined £266 million and JPMorgan Chase £208 million.
Law firm files a claim
Globally, more than a dozen banks have paid around £10 billion in fines and £2 billion on compensation.
Now, investors are planning to take UBS, RBS, Barclays, JP Morgan and Citigroup to court to claim compensation for their losses.
The £1 billion claim was filed at the Competition Appeal Tribunal in London, disclosed US law firm Scott + Scott.
The challenge is among the first tests of new laws in Britain allowing collective class actions.
Investors in the UK are automatically included in the action unless they opt-out, and if the case is won, will receive a share of the compensation.
Expat claimants must sign up to the court action.
Test case before Supreme Court
The legislation aims to provide a more effective way to claim compensation for consumers and businesses falling victim to anti-competitive conduct.
The case is fronted by Michael O’Higgins FX Class Representative Limited, a company set up by O’Higgins, former chairman of The Pension Regulator and financed by third-party litigation funder Therium Capital Management.
“We are confident we’ve got a strong case, especially given the EC ruling. But that only imposed fines on the banks. This case is about civil recovery for those institutions who have been affected,” said O’Higgins.
A collective class action test case against credit card giant MasterCard is snarled up in the courts. Lawyers are claiming £14 billion from the firm for overcharging 45 million customers in the UK over 16 years.
The case is awaiting clearance to go before the Supreme Court.