May 30, 2014 / 10:55 PM / in 4 years

Twelve major banks seek dismissal of forex price-rigging lawsuit

NEW YORK, May 30 (Reuters) - Twelve major banks asked a U.S. judge on Friday to throw out a consolidated antitrust lawsuit accusing them of colluding to rig prices in the $5 trillion-a-day foreign exchange market, saying the plaintiff investors had failed to properly allege the existence of a conspiracy.

Investors, including the city of Philadelphia and a number of hedge funds and pension funds, accused the banks of conspiring since January 2003 to manipulate the WM/Reuters Closing Spot Rates, using chat rooms, instant messages and email.

The defendants - Bank of America Corp, Barclays Plc , BNP Paribas SA, Citigroup Inc, Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc, HSBC Holdings Plc, JPMorgan Chase & Co, Morgan Stanley, Royal Bank of Scotland Group Plc and UBS AG - filed a joint motion to dismiss the case on Friday in U.S. District Court in Manhattan.

“Despite their breathtaking scope, the complaints do not plead a single fact about a single instance in which a single defendant engaged in even one concerted act to manipulate any particular currency rate,” the banks wrote. “Nor do they identify a single transaction by a plaintiff or any factual basis for a claim that any plaintiff has been injured by an alleged conspiracy to manipulate benchmark exchange rates.”

The banks also asserted that the theory underlying the conspiracy allegations “makes no economic sense.” Any attempt to inflate one currency artificially would deflate the relative value of other currencies against which it is traded, the banks argued, and dealers cannot know in advance which currencies they will be buying or selling each day.

Christopher Burke, one of the lead lawyers for the plaintiffs, declined to comment immediately on Friday.

The case is proceeding against a backdrop of civil and criminal probes worldwide into whether banks rigged prices to boost profit at the expense of customers and investors.

The 12 defendants have an 84 percent global market share and serve as counterparties in 98 percent of U.S. spot volume, according to the lawsuit.

In their complaint, the investors said employees of the defendants used such names as The Cartel, The Bandits’ Club and The Mafia to swap confidential customer orders and trading positions and colluded to set prices through such tactics as “front running/trading ahead,” “banging the close” and “painting the screen.”

U.S. District Judge Lorna Schofield is overseeing the litigation.

The case is In re: Foreign Exchange Benchmark Rates Antitrust Litigation, U.S. District Court, Southern District of New York, No. 13-07789. (Reporting by Joseph Ax; Editing by Leslie Adler)

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