September 23, 2020

JPMorgan inks deal to exit Forex Antitrust Case


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NY Attorney General Files Lawsuit Against JP Morgan Chase Over Bear Stearns FraudBy Scott Flaherty, From The Litigation Daily

JPMorgan Chase & Co. and its lawyers at Skadden, Arps, Slate, Meagher & Flom have laid down their arms in antitrust litigation accusing a dozen banks of manipulating foreign exchange rates.

Skadden, along with plaintiffs lawyers from Hausfeld LLP and Scott & Scott, signaled in a letter Monday to U.S. District Judge Lorna Schofield in Manhattan that JPMorgan has settled claims that it participated in a scheme to rig foreign exchange rates, such as the benchmark World Markets/Reuters Closing Spot Rates. The terms of the deal weren’t immediately available in public filings, though the letter noted that high-profile mediator Kenneth Feinberg oversaw the settlement talks.

When we reached out on Monday, Peter Greene, one of the Skadden lawyers leading the defense for JPMorgan, referred us to his client. JPMorgan spokesman Brian Marchiony declined to comment. Michael Hausfeld, one of the lead plaintiffs lawyers on the case, told us the settlement was a “responsible move” by JPMorgan.

“The agreement should set the tone for further developments favorable to the plaintiffs,” Hausfeld said.

The JPMorgan deal marks the first settlement in the forex litigation, which was launched by proposed class of investors in November 2013. The plaintiffs—which include the city of Philadelphia, public employee pension plans and hedge funds—allege widespread manipulation of the approximately $5 trillion-per-day foreign exchange market. The investors sued 12 major financial institutions in all, including Bank of America Corp., Citigroup Inc. and Goldman Sachs & Co.

In late May, the banks, including JPMorgan, urged Schofield to throw out the case. Among several arguments, the banks claimed the investors hadn’t alleged a plausible conspiracy and had failed to tie the alleged rate rigging to the banks’ efforts to secure business in the market for foreign exchange services.

“At best, plaintiffs have alleged—based on unsubstantiated conjecture and hypotheses—that dealers may have engaged in improper trading practices designed to take advantage of their customers who put in orders to trade at the fix—conduct that, although allegedly manipulative, is not conduct that the antitrust laws are designed to police,” the banks wrote in their dismissal brief.

The judge held a hearing on the banks’ motion on Nov. 20, according to court records. JPMorgan reached its deal with the plaintiffs before Schofield issued a decision.

Separate from the investor suit in front of Schofield, JPMorgan and other banks have faced civil and criminal probes launched by regulators in the U.S. and elsewhere around the world. In November, the U.S. Commodity Futures Trading Commission announced that JPMorgan, Citibank NA, HSBC Bank PLC, The Royal Bank of Scotland PLC and UBS AG had agreed to pay a total of $1.4 billion in penalties for allegedly attempting to rig foreign exchange benchmarks.

In addition to JPMorgan, the defendants in the foreign exchange antitrust suit include Bank of America Corp. (represented by Shearman & Sterling); Barclays PLC (represented by Sullivan & Cromwell); BNP Paribas, (represented by Allen & Overy); Citigroup Inc. (represented by Covington & Burling); Credit Suisse Group AG (represented by Cahill Gordon & Reindel); Deutsche Bank AG (represented by Kirkland & Ellis); Goldman Sachs & Co. (represented by Cleary Gottlieb Steen & Hamilton); HSBC Holdings PLC (represented by Locke Lorde); Morgan Stanley (represented by Wachtell, Lipton, Rosen & Katz); The Royal Bank of Scotland Group PLC (represented by Davis Polk & Wardwell); and UBS AG (represented by Gibson, Dunn & Crutcher).

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