Latest Update on Citibank and Barclays Forex Law Suits

Citibank Inc. and Barclays PLC are anticipated to settle on a law suit claimed by private investors that the banks have manipulated forex rates, as per people close to the underlying situation.

As per these people, New York base, Citibank and London based, Barclays will together pay a large amount of $800 million in order to settle the law suit. This represents bigger payments, almost double of what JP Morgan Chase & Co. and UBS AG have settled in the same law suit.

Currently, it has not been determined how much Citibank and Barclays would be paying individually.

In the law suit, the plaintiffs include some other investment firms and pension funds. When asked for a comment, the representatives of Citibank and Barclays refused to make a statement.

The Investigation

In the global investigation against big banks for their alleged rigging in currency rates, this settlement would probably be the biggest wrinkle.

Big banks like Barclays and Citibank are continuously in high stake negotiations with the US Justice Department (DoJ) and regulators with whom they are facing similar allegations.

The Wall street journal has previously reported that the DoJ has pressed these banks to plead guilty to the criminal antitrust charges against them.

According to people who are aware of the situation, government negotiations could probably charge the banks much more as the DoJ is asking for almost $1 billion from each bank.

Previous Settlements

Citibank has already agreed to pay $1 billion combined in November in order to settle the foreign exchange charges with the US Commodity Futures Trading Commission, Office of the Comptroller of the Currency in US and the U.K.’s Financial Conduct Authority.

Other banks, including JP Morgan and UBS, are also known to negotiate settlements with these agencies and they did not dispute the regulator’s findings. Barclays did not participate in the negotiations and did not settle.

Trading and the Traders

Citibank has the largest share of foreign exchange market with 15% daily currency trades. They are followed by Deutsche bank AG, and then by Barclays with a 10% market share.

Both the banks in question have suspended various traders that were connected to the currency trades investigation, which began in London in April 2013 by the FCA UK.

The Lawsuit

The private lawsuit was filed in late 2013 by investors in the US, Caribbean and pension funds who have accused several banks of sharing confidential client information through electronic chat rooms and then using the information to make money at the client’s expense.

The investors have mentioned that they were harmed by participating in foreign-exchange transactions with the banks. According to the lawsuit, the traders are a close-knit group belonging to the same social circle that play golf together, dine together and are also a part of many same charity boards.

JP Morgan was the first bank to settle the lawsuit. It is definitely not a common practice, when a lawsuit against many companies have been filed, that one actually comes forward to try and broker the best deal.

So, JP Morgan’s decision has caused certain turmoil among other banks.

This case is currently pending in Manhattan and will soon see a settlement from Citibank and Barclays as per recent developments. Everyone connected with the case wait with anticipated breaths to see what’s the final outcome!

Posted On 31 Mar 2015

, By Wayne

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