Forex rigging scandal: now for the lawsuits

A wooden judge gavel and soundboard isolated on white background in perspective

Yesterday I did a blog asking why none of the bankers involved in the recent forex rigging scandal had gone to jail.

It’s only a matter of time until the law catches up with them. There will have to be class actions. Currency trading is a vast business, with $500 billion exchanged daily in the dollar-euro market. The number of people affected by the manipulation is huge, not to mention the institutions.

The Bank of New York Mellon is already paying $180 million to settle a foreign exchange-related class action lawsuit, resolving almost all of its currently pending forex-related actions and Citigroup is paying $394 million to settle a lawsuit from investors who have accused the bank of manipulating foreign-exchange rates, the parties in the case announced.

British law firms are now warning that it would be “surprising” if FTSE 100 firms have not looked into the merits of potential claims against the banks over this latest scandal.

They’re saying the banks should brace themselves for claims, particularly from pension funds and other money managers that have suffered losses on foreign exchange trades as a result of market manipulation.

And you can bet American companies would be planning the same.

Lawyers would be rubbing their hands in anticipation of the barrage of civil lawsuits. And the fact that four banks — CitigroupJPMorgan Chase,Barclays and Royal Bank of Scotland — pleaded guilty to conspiring to fix prices and rig bids all points to liability. That’s money for lawyers. Bad luck for investors.

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