Last week, a federal district judge denied a motion to dismiss filed by 12 banks in a class-action antitrust lawsuit alleging they had rigged the foreign exchange (forex) markets. In response, defendant JPMorgan Chase & Co. promptly settled the lawsuit for $99.5 million and an agreement to assist in the prosecution of claims against the remaining defendants.
Plaintiffs from the U.S., South Korea and Norway all filed separate class-action lawsuits against the defendants, alleging the same operative facts. These lawsuits were eventually consolidated into a multi-district litigation in the Southern District of New York. The complaints alleged that traders from the banks had used electronic communications to “exchange information on customer orders and agree to trading strategies to manipulate” the forex rates, in violation of U.S. antitrust law.
The banks contended that the complaint filed by the U.S. plaintiffs should be dismissed because the complaint did not adequately allege a conspiracy, harm to competition, injury in fact or antitrust injury. Judge Lorna G. Schofield rejected all four arguments on Jan. 28, 2015, carefully assessing the allegations in the complaint and determining that the facts set forth therein were enough that discovery and trial were needed to determine their veracity. Not surprisingly, the Court also noted that $4.3 billion in fines already levied against the banks by various U.S. and foreign enforcement agencies supported the complaint’s inference of a conspiracy: “the reported investigations and their outcomes merely buttress the critical allegations in the U.S. Complaint that detail how the benchmark was manipulated through actions that were inherently collusive and conspiratorial. . .”
Two days after the Court rendered its opinion, the U.S. plaintiffs moved for approval of a preliminary settlement with JPMorgan Chase bank. Under the proposed settlement, JPMorgan would provide the plaintiffs with $99.5 million in cash and an agreement to provide significant cooperation to the plaintiffs in pursuing their case against the non-settling defendants. Information provided by JPMorgan will certainly be a boon to the plaintiffs’ continued prosecution of their case and might encourage other defendants to reach similar settlements, rather than face the time and expense of what is sure to be a lengthy court battle.