Nine major banks including Royal Bank of Scotland (RBS), HSBC and Barclays have settled a $2bn (£1.28bn) claim brought by investors in a US court for losses caused by the rigging of foreign exchange markets.
The law firm that brought the claim in New York’s southern district court said there was scope for cases to be brought outside the US.
Anthony Maton, a managing partner at the law firm Hausfeld in London, said: “The extent of collusive conduct in the FX market is now clear. US investors will see compensation from these settlements. Others will not.
“There is no doubt that anyone who traded FX in or through the London or Asian markets – which transact trillions of dollars of business every day – will have suffered significant loss as a result of the actions of the banks. Compensation for these losses will require concerted action in London.”
The case comes after banks were hit with record fines for manipulating forex markets, where £3.5tn a day changes hands from Sydney to London and New York. The fines topped £6.3bn, with the Financial Conduct Authority (FCA) issuing penalties alongside US regulators including the Department of Justice.
David Scott, a managing partner of Scott + Scott, another law firm involved in the case, said: “The settlement agreements we have entered into with nine banks go a long way to ensuring that they are being held accountable for their egregious manipulation of the foreign exchange market.”
It was not immediately clear if the banks will incur additional costs to settle the case brought by Hausfeld, as many of them have already set aside billions of pounds to deal with the forex-rigging scandal. RBS said in May that it had reached a settlement in the case and taken enough provisions to cover its bill.
HSBC mentioned the lawsuit in its interim results earlier this month, as did Barclays, although neither said it had been settled.
At least seven other banks are being pursued in the continuing case in the New York court, where the allegation is that they conspired to manipulate prices in the foreign exchange market since 2003.
The ratings agency Moody’s issued updates on its assessments of Barclays and RBS, making reference to the continuing costs of litigation and investigations by regulators. Issuing a stable outlook on RBS, Moody’s said: “Although RBS’s current capital ratios are adequate, our current assessment of the group’s capitalisation considers the risk of volatility in the ratios as the restructuring progresses and pending litigations are settled, as well as its limited ability to raise fresh equity capital as a result of quasi-UK government ownership.”
Moody’s also gave Barclays a stable rating but said its profitability could be held back by weak revenues, as well as high litigation, conduct and restructuring costs.
This article was written by Jill Treanor, for theguardian.com on Friday 14th August 2015 15.44 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010