Plaintiffs in FX benchmark rate fixing case slam banks for insufficient responses to interrogatories

Maria Nikolova

No defendant bank has adequately and sufficiently responded to the interrogatory seeking summaries of retail sales
of euros for dollars.

The parties in a Forex benchmark rate fixing case that targets some of the world’s major banks have clashed over responses to interrogatories. In a letter, filed with the New York Southern District Court on July 10, 2020, the parties inform the Court about the disputes regarding the interrogatories.

Let’s recall that this case has been brought by a putative class of consumers and end-user businesses alleging that they paid inflated foreign currency exchange rates caused by an alleged conspiracy among some of the world’s biggest 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. The list of defendants includes banks such as JPMorgan, HSBC, Citi, Barclays and UBS.

The latest disputes concern the sufficiency of the banks’ responses to the following two interrogatories: (i) “state summaries of all retail sales of euros for dollars by each defendant in the period January 1, 2007 through December 31, 2013” (“Interrogatory #1”) and (ii) “How did you . . . , a Defendant bank determine the USD/EUR FX exchange rate for a purchase of EUR with USD for wire to another location in the period January 1, 2007 to December 31, 2013. (A.) Was it based on a formula? . . . Explain the calculation used.” (“Interrogatory #8A”). According to the plaintiffs, the responses of the defendants were wholly insufficient and inadequate.

The plaintiffs argue that no defendant has adequately and sufficiently responded to agreed Interrogatory #1, seeking summaries of retail sales of euros for dollars. No defendant except Bank of America and HSBC responded to agreed Interrogatory #1, including “making clear the types of transactions they cover,” by providing a summary of sales. None of the defendants including Bank of America designated the types of transactions covered or covered the full period 2007-2013.

For example, Citi did not provide any summary reports of the relevant transaction volumes; HSBC failed to designate the types of transactions included; and JPMorgan did not provide data for 2009-2010 and failed to designate the types of transactions included.

Further, the plaintiffs say that no defendant has disclosed or identified the purchases made by business end users even though the Court’s Opinions have recognized that the putative class is “all consumers and businesses” that purchased foreign currency “for their own end use…”

Finally, the plaintiffs note the banks’ refusal to disclose the daily spot rates and the daily retail exchange rates that the defendants used in their calculations despite the fact that the defendants’ responses show that daily spot rates are the primary component of retail rates.

Citibank, JPMC, Barclays and HSBC responded that daily wholesale spot market rates are the primary component of retail exchange rates plus a small markup e.g. 6.5%, but none of them disclose the daily spot rates that were used to calculate retail rates in the period 2007-2013, nor the daily retail rates, which the plaintiffs’ expert requires for his regression analysis.

According to the defendants, the plaintiffs “now raise a host of meritless issues, many of which are completely unrelated to the interrogatories”.

The lawsuit continues at the New York Southern District Court.

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