December 11, 2019 / 12:44 PM / a month ago

Second U.S. law firm files London forex class action

LONDON (Reuters) - U.S law firm Hausfeld has filed a lawsuit in London against major banks over alleged foreign exchange (forex) rigging in a bid to take over a high-profile British class action from compatriot Scott & Scott.

A Citibank branch is seen in Santa Monica, California, U.S. March 19, 2018. REUTERS/Lucy Nicholson

The new action, called FX Claim UK, seeks damages from Barclays, Citibank, RBS, JPMorgan, UBS and MUFG Bank over their role in forex spot trading cartels between 2007 and 2013 and was filed at London’s Competition Appeal Tribunal (CAT) on Wednesday.

JPMorgan, UBS, Citigroup and MUFG declined to comment. RBS, Citibank, Barclays did not immediately respond to requests for comment.

Hausfeld and Scott & Scott co-led a similar U.S. action against 15 banks, securing $2.3 billion for American claimants, after some of the world’s top banks paid more than a combined $11 billion in fines to settle U.S. and European regulatory allegations that traders rigged foreign exchange markets.

Banks now face another potentially huge class action in Britain after being fined more than 1 billion euros ($1.1 billion) by the European Commission in May over cartels dubbed “Essex Express” and “Three Way Banana Split”.

“The fines do not go to those affected by the cartels. Through this action, we want to hold the banks accountable for their actions and secure compensation for affected customers,” said Phil Evans, a former Competition and Markets Authority inquiry chair, who is leading FX Claim UK.

The latest class action application was filed five months after its rival and heralds a potential “carriage dispute”, when a court is asked to decide which group will prevail. At a court hearing last month, judge Marcus Smith said there could be only one representative for such a class action.

A spokeswoman for Scott & Scott said: “Other law firms have been wanting to insert themselves into this litigation for years, but they have a lot of catching up to do.”

The first lawsuit, called UK FX Cartel Claim, is led by Michael O’Higgins, the former chairman of British watchdog The Pensions Regulator and funded by litigation funder Therium. FX Claim UK is funded by Bench Walk Advisors.

Both have after-the-event insurance cover, should the claim be unsuccessful.

Foreign exchange is seen as the crown jewel of London’s financial sector. With about 43% percent of the $6.6 trillion-per-day forex market traded there, lawyers have jostled for position since the Consumer Rights Act introduced the first “opt-out” class actions for breaches of UK or EU competition law in 2015.

In such cases, UK-based members of a defined group will automatically be bound into legal action unless they opt out, while foreign-based claimants actively have to sign up.

Reporting By Kirstin Ridley, editing by Sinead Cruise and David Evans

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