Big banks in the gun with new forex cartel class action

27 May 2019
Some of the world’s largest and most recognisable banks will face a cartel class action by Australia’s leading class action experts, Maurice Blackburn Lawyers, over claims they systematically manipulated foreign exchange rates to boost profits at the expense of Australian businesses and investors.

Maurice Blackburn today filed a Federal Court class action suing UBS, Barclays, Citibank, Royal Bank of Scotland and JP Morgan, claiming the banks colluded to rig foreign exchange rates during the period between 1 January 2008 and 15 October 2013.

Traders allegedly used chat rooms bearing names such as ‘The Cartel’, ‘The Bandits’ Club’, and ‘The Mafia’, and communicated directly with each other to coordinate the manipulation of FX benchmark rates, control the pricing of spreads and to trigger client stop loss orders and limit orders.

Maurice Blackburn Principal Lawyer, Kimi Nishimura, said the collusive conduct has been the subject of extensive regulatory and private enforcement action in the USA and Canada.

“Australian businesses and investors – particularly medium to large importers, exporters, institutional investors and businesses with operations overseas – have been affected by the distortion of the FX market by these banks. Such cartel behaviour cheats Australian businesses in circumstances where they may already have been vulnerable to currency fluctuations,” Ms Nishimura said.

“These cases are hard and complex to bring but that doesn’t mean that wrongdoing on a mass scale such as this should go unchecked. As the only Australian law firm to have run and won cartel class actions, we are well placed to run this case.”

The action is on behalf of foreign exchange customers that bought or sold currency (FX spots and forwards) between 1 January 2008 and 15 October 2013, and the total value of transactions exceeded $500,000 over that period. The case will be represented by lead plaintiff J. Wisbey and Associates who imported dental and medical equipment during the period.

“Australian businesses shouldn’t pay more because the banks got together to work out how to make more profits for themselves. It’s hard to take individual action against this kind of price rigging because the price increases are small, but when repeated over thousands of transactions they make a real difference to currency prices,” Managing Director Greg Wisbey said.

“I rely on forex trading because my business needs to trade with international companies, but to have been subjected to an uneven playing field and paying an inflated price for no good reason, well that’s just unfair and hurts Australian businesses like mine.”

The Australian Dollar occupies a significant position in the operation of the FX markets. As at September 2013, the Australian foreign exchange market was the eighth largest in the world, and the AUD was the fifth most traded currency, with the AUD/USD the fourth most traded currency pair.

Maurice Blackburn has the nation’s leading class action practice, having secured around 66 per cent of all class action recoveries in Australian history. It is also the only firm to have run and won cartel class actions in Australia, having done that on four occasions up until now.

Media inquiries: Cameron Scott at Maurice Blackburn on (03) 96052832 or 0400 876 466, or via cscott@mauriceblackburn.com.au