Plaintiffs in Forex benchmark rate fixing lawsuit seek to support their claims

Maria Nikolova

The plaintiffs in a case targeting some of the world’s major banks seek to prove that the amendments they want to make to their complaint are not futile.

As FinanceFeeds has earlier reported, Judge Lorna G. Schofield of the New York Southern District Court has instructed the plaintiffs in a Forex benchmark fixing case to file a letter providing details about the amendments they want to make to their complaint against some of the world’s major banks. These amendments concern the definition of “foreign currency retail transactions”.

According to the plaintiffs, “foreign currency retail transactions” should include transactions other than those involving foreign currency purchased with USD and physically received at the defendant banks’ retail branches within the United States, including credit and debit card transactions and ATM cash withdrawals abroad.

Let’s recall that this lawsuit was brought by Go Everywhere, Inc., Valarie Jolly, Mad Travel, Inc., Lisa McCarthy, John Nypl, and William Rubinsohn. The list of defendants includes JPMorgan Chase & Co. (NYSE:JPM), JPMorgan Chase Bank, N.A., Barclays Capital, Inc., Citibank, N.A., Citigroup Inc (NYSE:C), Bank of America Corp (NYSE:BAC), Bank of America, N.A, HSBC Bank USA, N.A., and HSBC North America Holdings, Inc. A putative class of consumers and end-user businesses allege that they paid inflated Forex rates caused by an alleged conspiracy among the defendant banks to fix prices of FX benchmark rates in violation of Section 1 of the Sherman Antitrust Act, 15 U.S.C. sec. 1 et seq.

On Tuesday, January 29, 2019, the plaintiffs filed a Letter with the Court aiming to support their claims against the banks. The plaintiffs insist that the proposed amendments are not futile.

First, the plaintiffs note that the defendants’ core conduct alleged in the original complaint is the banks’ conspiracy in restraint of trade to manipulate benchmark FX rates resulting in overcharges in plaintiffs’ purchases of foreign currency. The proposed amendments relate to overcharges in purchases of foreign currency with credit, debit, ATM cards and wire, that arose from the conspiracy alleged in the original complaint.

In addition, the plaintiffs argue that the proposed amendments plausibly allege that there is a strong, arithmetic and mechanical correlation between credit, debit and ATM exchange rates, which move in near-perfect correlation with FX benchmark rates, and because FX benchmarks constitute the predominant component of FX credit, debit and ATM exchange rates, a direct link connects the alleged anticompetitive conduct and the plaintiffs’ injury.

According to the plaintiffs, this claim is supported by the declaration of Carl Saba, in which Mr. Saba concluded as follows:

“My analysis leads me to conclude that over the 144 days analyzed, there appears to be a strong correlation between the ECB Fix Rate for the EUR / USD currency pair, and the base exchange rates quoted by Visa and Mastercard to End-users (before addition of transaction fees). For the large majority of days, the variance between the End-user rates and the ECB Fix Rate is less than 1%”.

Furthermore, the proposed amendments allege that the plaintiffs made direct purchases of foreign currency from Defendant banks with their credit, debit and ATM cards issued by Defendant banks and wire. As alleged, plaintiffs’ cash, check, credit, debit, ATM and wire accounts are located at the defendant banks and, as alleged, the plaintiffs make their direct purchases of foreign currency directly from their accounts at defendant banks with those various modes of purchase.

Finally, the plaintiffs stress that the unlawful agreement is the banks’ conspiracy to restrain trade to which the defendants pleaded guilty, resulting in overcharges to the plaintiffs. The proposed amendments merely allege further modes of overpayment for foreign currency by credit cards, debit cards, ATM cards and wire resulting in direct injury to the plaintiffs in their card purchases of foreign currency from the defendants at exchange rates alleged to be arithmetically and mechanically correlated with FX benchmark rates.

According to the plaintiffs, FX benchmarks constitute the predominant component of FX credit, debit and ATM exchange rates, hence their is a direct link between the plaintiffs’ injury and the banks’ anticompetitive conduct.

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