FX Collusion Scandal Reaches Australia, Class Action Launched

May 26, 2019 Updated: May 30, 2019

An Australian law firm filed a class action lawsuit on May 27 against five major international investment banks accusing them of colluding to rig foreign exchange rates during 2008-2013 to jack up profits at the expense of businesses and investors.

The case involved some of the same banks caught up in similar currency market scandals in Europe and the United States.

UBS AG, Barclays Bank Plc, Citigroup Inc, Royal Bank of Scotland Group Plc and JP Morgan AG are accused, according to Australian court documents, of colluding to increase the price clients paid for certain investment products in order to fix exchange rates at more costly levels.

A sign is posted in front of a Citibank office on April 13, 2018 in Mill Valley, California. (Justin Sullivan/Getty Images)

Reuters emailed and called the banks named in the lawsuit.

JP Morgan declined to comment, while spokespeople for UBS, Citi, and RBS acknowledged receiving Reuters’ enquiries but were not immediately available for comment.

Maurice Blackburn, the law firm that has launched the case, alleged that traders from the banks, who were supposed to be competing with each other, shared confidential information like details of clients and their orders on internet chatrooms.

According to court documents, names given by the traders to those chatrooms included “The Cartel,” “The Mafia,” and “A CoOperative”.

Several of the same chatroom names were identified in an investigation into foreign exchange rate rigging by U.S. regulators.

In a U.S. case, Barclays, BNP Paribas, Citigroup, JPMorgan, Royal Bank of Scotland, and UBS have entered related guilty pleas, and been collectively fined more than $2.8 billion (A$4.04 billion).

Reuters reported earlier this month that EU anti-trust regulators investigating currency market rigging were set to fine seven banks, several of which were also accused in the case launched in Australia.

“Australian businesses and investors, particularly medium to large importers, exporters, institutional investors and businesses with operations overseas, have been affected by the distortion of the FX market by these banks,” said Maurice Blackburn principal lawyer Kimi Nishimura in a statement.

“Such cartel behavior cheats Australian businesses in circumstances where they may already have been vulnerable to currency fluctuations,” Nishimura added.

The lead plaintiff was a dental products importer called J. Wisbey and Associates, although the class action would represent any Australian customers of the five investment banks which had made cross-border transactions worth more than AU$500,000 ($346,250) in the five-year period, Maurice Blackburn said.

Maurice Blackburn wanted the five investment banks to pay damages to the plaintiffs without specifying how much, according to the court documents.

The dust has barely settled from the previous scandal that roiled Australia’s banking community in recent years after a market regulator launched a series of lawsuits against the country’s “Big Four” banks.

The regulator accused them of rigging the Bank Bill Swap Rate (BBSW)—a benchmark interest rate in Australia used to price trillions of dollars of assets – to inflate profit during the period 2010-2012.

Commonwealth Bank of Australia CBA.AX, National Australia Bank NAB.AX and Australia and New Zealand Banking Group ANZ.AX—settled before hearings began. Westpac Banking Corp defended the case, and was cleared by a court a year ago.

People walk past a branch of Australia’s Commonwealth Bank in Melbourne on June 4, 2018. (William West/AFP/Getty Images)
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