Retail Forex transactions once again at the heart of FX benchmark rate fixing case

Maria Nikolova

The plaintiffs argue that the plain meaning of “purchase” or “ payment” does not limit the means or methods of the purchase or payment, whether it be cash, check, credit card, debit card, ATM, or wire.

A Forex benchmark rate fixing case targeting top banks like 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., is once again focusing on the definition of “foreign currency retail transactions”. After Judge Lorna G. Schofield of the New York Southern District Court sided with the defendant banks about the definition in June this year, the plaintiffs have now officially filed a motion for reconsideration of that order.

In brief, the plaintiffs want the term to include debit, credit and ATM foreign currency transactions. The banks argue that this definition is too broad.

In their latest Motion, filed with the New York Southern District Court on Friday, July 20th, the plaintiffs, including Go Everywhere, Inc., Valarie Jolly, Mad Travel, Inc., Lisa McCarthy, John Nypl, and William Rubinsohn, ask the Court to accept their definition.

The plaintiffs’ complaint mentions “all consumers and businesses in the United States who directly purchased foreign currency from Defendants and their co-conspirators for their own end use since January 1, 2007 [to December 31, 2013]”. The allegation of “purchased”, the plaintiffs say, is not qualified by any reference to the purchase of physical currency in any of their complaints, nor in this Court’s Orders nor in the Plea Agreements. The Complaint does not limit the means used by the plaintiffs when they purchased and paid for the Defendants’ unlawfully inflated overcharges.

“The plain meaning of “ purchase” or “ payment” does not limit the means or methods of the purchase or payment, whether it be cash, check, credit card, debit card, ATM, or wire”, the plaintiffs argue.

In addition, the plaintiffs quote the “Federal Reserve Payments Study 2016”. In this report, the Fed, which governs the banks in question, stated: “Payments included in the study were initiated from accounts domiciled in the United States and typically involved the use of debit cards, credit cards, electronic credit and debit transfers using the automated clearinghouse (ACH) system or checks” including “automated teller machines (ATM) cash withdrawals.” The Fed’s inclusion of credit, debit and ATM in “payments” is, according to the plaintiffs, its recognition of the migration of payments from cash and check to predominant credit, debit and ATM payments since 2007, the beginning of the class period.

Importantly, on the credit, debit and ATM cards issued by the defendant banks, Visa and MasterCard accept the spot benchmark exchange rates that the banks allegedly manipulated and do not make independent determinations. By including the FX benchmark exchange rates that the banks allegedly manipulated as the primary component in foreign currency conversions on the credit, debit and ATM cards issued by Defendant banks, Visa and MasterCard do not make an independent determination of the exchange rates. They accept the benchmark exchange rates that Defendants manipulated and add on a small handling fee, the plaintiffs say.

Furthermore, the Complaint claims “that the manipulated FX benchmark rates were the primary component of the prices Plaintiffs paid for foreign currency in the consumer retail market.” The same is said to be true for purchases of foreign currency on credit, debit and ATM cards – the FX benchmark exchange rates allegedly manipulated by the banks are the primary component of the exchange rates paid by the plaintiffs for foreign currency on credit, debit and ATM cards issued by defendant banks.

Finally, the plaintiffs’ expert Carl Saba performed an analysis and concluded that there is a strong correlation between the benchmark ECB Fix Rates that were purportedly manipulated by the defendants and the base exchange rates quoted by Visa and MasterCard to end users.

The case, captioned Nypl v. JP Morgan Chase & Co. et al (1:15-cv-09300), continues at the New York Southern District Court.

Read this next

Industry News

Brokeree Solutions Wins the “Best Emerging Fintech” Award

2022 has become, for Brokeree Solutions, a time of new inventions and developments. We are pleased that the industry has appreciated this emergence of new technologies

Metaverse Gaming NFT

Glip raises $2.5 million to develop class-A Web3 games ecosystem

Web3 game discovery & wallet app, Glip has raised an additional $2.5 million in new funding from a range of investors, bringing the total investments it received to $6 million thus far. 

Inside View

Black Friday and trading: OctaFX presents the results of its client survey

What are the attitudes of traders toward the Black Friday period? What are their trading patterns during the shopping season? OctaFX asked its clients all the most important questions.

Retail FX

Dukascopy warns of clone website dukascopyd.swisbank

Switzerland’s forex bank and broker, Dukascopy has alerted the market and consumers to a clone of its authorised brand. The website, which remains active, is impersonating the genuine investment firm in an attempt to deceive people into handing over their hard-earned money.

Crypto Insider

A Step-by-Step Guide on How to Get a Crypto Wallet

The crypto ecosystem is very much based on the existence of a crypto wallet, as it is the gateway that allows users to securely store their assets with full transparency and protection.

Digital Assets

Finery Markets raises $5.5m to expand multilateral institutional marketplace for OTC crypto

“Running the first multilateral institutional marketplace in the crypto space, we aim to establish best practices across trading, risk management and operational standards for crypto.”

Institutional FX

TT adds products listed on SGX, ASX, HKEX, JPX to algo execution suite

Trading Technologies International, Inc. (TT) has added four major Asia-Pacific (APAC) exchanges to marketplaces supported by TT Premium Order Types.

Digital Assets

IG’s tastyworks, Interactive Brokers, Robinhood, among 13 investor partners of Cboe Digital

Cboe has completed the syndication of minority equity interests with a group of thirteen firms becoming investor partners in the Cboe Digital business. The list of investors include retail and institutional intermediaries, liquidity providers, and brokers. 

Retail FX

FP Markets adds exotic FX pairs from Africa, LATAM, Asia to MT4/5 offering

“As a top-tier broker, our objective is always client satisfaction. Therefore, the additional currency pairs, which can be traded either through our MT4 or MT5 trading platforms, offer investors choice and flexibility when trading in the currency market”.