Five large banks, including JPMorgan Chase, Citigroup, Barclays, RBS, and UBS, are being sued in a UK antitrust court. The class-action suit follows on a successful suit against these banks in the US over allegations of global foreign exchange rigging. Banks have already paid out more than $11 billion in damages over similar allegations in the US and Europe.
The UK Demands Its Pound of Flesh in Damages Over International Forex Cartel
The banks involved are major players in the world economy. US-headquartered JPMorgan is the world’s sixth-largest bank by total assets and the biggest banking corporation outside China. US bank Citigroup is the 13th largest bank in the world, UK-based Barclays 17th, UK Royal Bank of Scotland 24th, and Swiss UBS 27th. (Data sourced from S&P Global Market Intelligence’s 2019 global banking ranking).
Michael O’Higgins, the former chairman of British watchdog, the Pensions Regulator, leads the claim and filed with the Competition Appeal Tribunal. Therium Capital Management is funding the suit. A global leader in litigation finance group active across Europe, the USA, and Australia, they have a track record of $36 billion funded claims. UK-domiciled units will be automatically included. According to Britain’s 2015 Consumer Rights Act, UK-based members of a class action are naturally included in a suit unless they actively opt-out. Overseas-based claimants, however, should still sign up.
A Suit Five Years in the Making
The practice first came to light in 2013. Regulators undertook probes into bank trading practices in the US, UK, and Switzerland. They implicated more than a dozen financial institutions. Globally, banks have paid out roughly $11.8 billion in fines and penalties, with an additional $2.3 billion spent in customer and investor compensation.
Traders at various banks in cahoots with each other used exclusive chatrooms to exchange commercially sensitive information. Traders shared forex trading strategies and ‘standing down’ practices to allow another trader to engage in trade on such chatrooms. These informal chatrooms, named ‘Three-way banana split’, ‘Essex Express’, ‘Semi Grumpy Old Men’, and others effectively controlled currency markets in some of the world’s leading economies.
The European Union and the USA have both already fined guilty banks heavily. This new class-action suit brings the possibility of recovering damages over customer and investor losses to Britain. In the US, regulators also fined Goldman Sachs and HSBC.
Banks Trustworthy, Cryptocurrency Untrustworthy?
In 1832, US President Andrew Jackson vetoed the second Bank Recharter Bill, a move that helped get him re-elected later that year. In a commonly attributed quote, he told a banking delegation, “You are a den of vipers and thieves. I intend to rout you out, and by the eternal God, I will rout you out.” Another quote commonly believed to have been said by Sir Josiah Stamp, former President of the Bank of England, reads:
“Banking was conceived in iniquity and was born in sin. The bankers own the earth. Take it away from them, but leave them the power to create money, and with the flick of the pen they will create enough deposits to buy it back again. However, take away from them the power to create money and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create money.”
Markets are neither free nor fair, and thanks to unscrupulous practices, banking clients end up paying a premium for entrusting their capital and assets to traditional finance.
What are your thoughts on criminal acts such as those committed by the world’s leading banks? Should regulators slap them with more than just a hefty fine? Let us know in the comments.