Top banks seek to rebut “overbroad” evidence request in Forex benchmark rate fixing case

Leading banks that are defendants in a Forex benchmark rate fixing case have sought to rebut a request by the plaintiffs over documents production, arguing that the motion is based on an overbroad definition of retail Forex transactions.

On Tuesday, January 30, 2018, a number of banks, acting as non-foreign defendants in the case, captioned Nypl v. JP Morgan Chase & Co. et al (1:15-cv-09300), filed a Letter with the New York Southern District Court, asking Judge Lorna G. Schofield to deny the plaintiffs’ request for production of documents.

As FinanceFeeds has earlier reported, the plaintiffs and the defendants disagree over the definition of retail Forex transactions. The banks, including 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., insists that the definition covers transactions involving foreign currency “physically received” at their branches within the United States for “U.S. Dollars”.

The plaintiffs, on the other hand, want to broaden the definition to include “all instructions or directions to branches, subsidiaries or affiliates as to how to process foreign currency exchanges or sales”. The definition, according to the plaintiffs, should also include wire transfer, credit card, debit card, and ATM transactions that involve transactions outside the United States.

Let’s recall that the plaintiffs have requested the following information from the defendants:

• Summaries of the dollar volume of foreign currency retail transactions for each year during the period January 1, 2007 – present and the number of transactions per year and number of customers;
• Documents sufficient to show the method for calculating the foreign currency exchange rates charged to retail customers during the period January 1, 2007 – present and the individuals who developed or managed that method;
• The profit and loss statements for retail transactions for the period January 1, 2007 – present;
• Documents sufficient to show the personnel in charge of the retail foreign currency operations January 1, 2007 – present;
• Executive summaries of foreign currency retail operations and any executive summaries to management or the board of directors mentioning, relating or referring to retail foreign currency transactions January 1, 2007 – present.

In their latest Letter, the banks argue that the plaintiffs’ proposed definition of retail FX transactions is inconsistent with the allegations in their complaints, which have focused exclusively on the purchase of physical foreign currency at the banks’ retail branches in the United States by consumers and business end-users.

In addition, the complaints do not include any allegations of a purported “direct correlation” between “Benchmark exchange rates” and foreign exchange rates for purchases with credit cards, debit cards, and ATM cards outside the United States, or for international wire transfers, the banks note. Thus, according to the defendants, these transactions are not, and never have been, a part of the Nypl case. In fact, the words “credit card,” “debit card,” “ATM,” and “wire transfer” do not appear anywhere in any of the plaintiffs’ complaints.

The banks also argue that in addition to failing to allege that credit, debit and ATM card rates relate in any way to allegedly manipulated spot market benchmarks, the plaintiffs fail even to allege who determines the card rates. Indeed, publicly available information indicates that it is the card networks (e.g., Visa and MasterCard) that generally set the foreign exchange rate when a card is used abroad.

The defendants seek that the plaintiffs’ request to compel production of documents under an overbroad definition of retail FX transactions be denied.