We published a blog last year in relation to the foreign exchange market (Forex) banking scandal. This has been described in some quarters as the latest banking scandal since PPI, Swaps and Libor. A large onset of litigation is now expected against five major banks amongst others following last year’s decision by the Financial Conduct Authority (FCA) to fine them for rigging the £3.4trn-a-day foreign exchange market. The details of such fines have now been released.
The foreign exchange market is a global decentralized market for the trading of currencies. The Forex is not renowned for being easy to manipulate but there is scope for experienced traders to change a currency’s value in order to make a healthy profit. Traders possess clever techniques which can alter the market’s impression of both supply and demand and consequently reflect a change in price. Recent years have witnessed an increase in such techniques at the hands of the banks and other experienced traders. Tactics can involve collusion, sharing of confidential information and submission of a raft of orders during the window when the fix is set.
Such price shifts involve very fine margins so holidaymakers will largely be unaffected when purchasing foreign currency however there will be far-reaching detrimental implications for the more specific Forex market participant. An integral ingredient to bringing a successful action will be to illustrate that the bank behaved in such a way as to have profited at the expense of the customer. The FCA’s ruling drew attention to the deliberate manipulation of the system by the banks to the detriment of certain clients and other market participants. The FCA findings have referred to specific examples of collusion between traders at different banks using online messaging.
On an almost daily basis from 2007 through to 2012, traders utilized online chat rooms to manipulate such rates. The most favoured strategy was to influence prices around that day’s fixed currency level. A single trader would typically amass a large position in respect of a certain currency and just before or during the so-called 4pm fix, he would exit that position. This would in turn allow other members who were aware of the scheme to profit.
No fewer than 5 of the largest global banks have now been ordered to pay fines of circa. £3.6bn in respect of their manipulation of the foreign exchange market. The banks in question are JP Morgan, Barclays, RBS and Citigroup. Barclays received the highest fine due to the fact it failed to attend along with the other banks in respect of settlement investigations by UK, US and Swiss Regulators. The £284m fine handed to Barclays was a record by Britain’s Financial Conduct Authority.
A number of members of staff at the banks in question have also been dismissed for their misconduct in respect of the fixing. Barclays and the Royal Bank of Scotland in particular are also likely to see an onset of civil actions from individuals or organisations in the UK who have proved that they have lost out due to the fixing. Barclays and RBS have both expressed their sincere regret and apologies in relation to the recent findings.
Here at Farleys we are experts at dealing with such manipulation of the Forex by the banks and traders. We have recently acted for both national and international clients who have suffered loss at the hands of the banks. If you have been affected by any of the above issues or would like to speak to one of our specialist solicitors then do not hesitate to contact us today for expert advice on the grounds for bringing a successful claim. To speak to a Farleys solicitor who specialises in Commercial Litigation please call 0845 287 0939 or alternatively you can email us.