Barclays, UBS, RBS, HSBC have to be sued in NY over FX manipulation, plaintiffs argue

Maria Nikolova

Plaintiffs, representing a putative class of consumers and business end-users sue several banks for allegedly engaging in an unlawful conspiracy to fix FX benchmark rates.

An argument over jurisdiction has emerged in the case Nypl v. JP Morgan Chase & Co. et al (1:15-cv-09300), which accuses a number of major banks of conspiracy to fix foreign currency benchmark exchange rates and include price-fixed rates in the prices paid by plaintiffs and a putative class.

In their latest filing with the New York Southern District Court, the plaintiffs, representing a putative class of consumers and business end-users, try to prove that the banks have to be sued in the United States. Defendants Barclays PLC (LON:BARC), HSBC Holdings plc (LON:HSBA), Royal Bank of Scotland Group plc (LON:RBS), The Royal Bank of Scotland PLC and UBS AG had moved to dismiss the Third Amended Complaint for lack of personal jurisdiction. The plaintiffs argue that this motion for dismissal should be denied.

One of the main arguments that the Plaintiffs use is that on May 20, 2015 and December 11, 2012, the banks in question entered into Plea Agreements and Deferred Prosecution Agreements with the United States Department of Justice and had Orders imposing civil penalties entered against them by the Federal Reserve Board (FRB) and the Commodity Trading Futures Commission (CFTC) for engaging in a conspiracy to manipulate and price-fix FX benchmark exchange rates “in the United States and elsewhere” and “within the flow of, and substantially affected, interstate and U.S. import trade and commerce.”

By imposing fines directly on the parent-level corporations, Barclays PLC, Royal Bank of Scotland plc, and UBS AG and HSBC Holdings PLC in the Plea Agreements and FRB and CFTC Orders, the DOJ, FRB and CFTC held the parent corporations responsible for engaging in a conspiracy to manipulate and price-fix FX benchmark exchange rates “in the United States and elsewhere”. This is seen to establish a prima facie showing of personal jurisdiction over the moving Defendants, including wrongful conduct in offices in the United States in Stamford, Connecticut and New York, New York.

The DOJ, FRB and the CFTC held the foreign, parent companies responsible for their wrongdoing, the plaintiffs note.

The Third Amended Complaint also alleges that the foreign currency FX benchmark exchange rates that were generated by Defendants’ concerted manipulation of the benchmarks or “fixes” were collusively included in consumer pricing in the consumer retail sales of foreign currency in the United States to Plaintiffs and the putative class by Defendants as the principal, almost entire component (93%) in the pricing of Defendants’ retail sales of foreign currency to Plaintiffs and the putative class. The Complaint makes a prima facie showing of specific jurisdiction in that it alleges that the moving Defendants participated in the alleged conspiracy to manipulate and price -fix the benchmark exchange rates in the United States and aimed to cause harm in the United States by collusively including the price-fixed benchmark exchange rates in the pricing of consumer retail transactions.

The defendants are also alleged to have bypassed the physical location of branches and local addresses. Each of the banks is alleged to have purposefully directed its price-fixed foreign currency products interactively online in the United States, including New York using only their logo name “BARCLAYS,” “THE ROYAL BANK OF SCOTLAND,” “UBS,” AND “HSBC,” and to have waived any distinction between their various legal entities and brick and mortar addresses and have also subjected themselves to the personal jurisdiction of this Court.

Plaintiffs request that the Court denies moving Defendants’ Rule 12(b)(2) motion to dismiss and/or grant Plaintiffs’ discovery of the Defendants’ declarants.

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