Investors are suing five British banks, including Barclays and Royal Bank of Scotland, in a legal suit worth about £1 billion over allegations that the banks had rigged the foreign exchange market. Experts view this law suit as an attempt to lodge a class action law suit in the United Kingdom as is done in the United States.
The claim has been filed at the Competition Appeal Tribunal by a US law firm that specialises in stock market litigation cases. Apart from the two British banks, the law suit also indicted US investment banks JP Morgan and Citigroup, and Switzerland’s UBS.
In May this year, all the five banks were slapped a fine of more than €1 billion or about £910 million by the European Commission over changes of colluding together to reduce competition in markets for 11 currencies that included the US dollar, the euro and the pound. It is being believed that the legal action now is based on and empowered by decision of the Commission.
To rig the multitrillion-dollar foreign exchange market, online chatrooms were used by the members of the banks and cartels of traders with names such as the “Three-Way Banana Split”. The European Commission did not fine UBS because it played the whistle blower role in the scandal and informed the Commission of the misdeeds. Japan’s MUFG was however penalized.
Charges of foreign exchange manipulation against Barclays, RBS, JP Morgan, Citi and UBS had drawn fines of more than $8.5 billion by regulators all over the world, said Scott + Scott, the law firm representing investors. The firm has previously been able to bring out more than $2.3 billion in compensations in the United States from banks including Barclays, RBS, UBS and Deutsche Bank through a US class action suit.
Compensation for investors and companies who have been allegedly damaged by the banks’ actions is being sought in the claim that is being led by Michael O’Higgins, the former chair of the Pensions Regulator. Instructions to carry out work on the case to Scott + Scott has been made by O’Higgins.
“Just as compensation has been won in the US, our legal action in the UK will seek to return hundreds of millions of pounds to pension funds and other corporates who were targeted by the cartel,” O’Higgins said.
In 2015, changes made in the law now allows collective legal case filing which are similar to the filing of class actions, which have been ongoing for years, and which have managed to drawn out compensation worth billions of dollars on behalf of consumers and investors from a host of companies in the tobacco, drug and other industries.
A class action suit gives the power to a judge to bring all similar claims under a single legal claim which helps to bring down the costs of litigation for investors or consumers as well as a provision of sharing of compensations between the claimants who otherwise might not have been able to afford the costs of filing law suits on their own.
(Adapted from TheGuardian.com)