By Alex Lawson
Law360, New York (November 19, 2013, 6:48 PM ET) — Barclays PLC, Citigroup Inc. and other banking giants have been hit with a new putative class action surrounding foreign exchange rate manipulation in New York federal court, this time facing allegations from a South Korean technology firm that the group’s conduct caused financial damage to traders in that country. The suit was filed by semiconductor manufacturer Simmtech Co. Ltd. on Nov. 8 and targets a group of banks that also includes Credit Suisse Group AG, Deutsche Bank AG, JPMorgan Chase & Co., The Royal Bank of Scotland Group PLC and UBS AG. The alleged conspiracy among the group, which the suit claimed went by the names “The Bandits’ Club” and “The Cartel,” adversely affected the pricing of trillions of dollars’ worth of financial transactions around the world. “Defendants conspired to artificially set [forex rates], communicating with each other through instant message to align strategy on a routine basis when respective client orders match up enough to allow for rate-setting, as well as to glean information about impending trades to improve their chances of getting the desired move in the benchmark — aka the systemic exploitation of global markets and their own clients,” Simmtech told the court. Simmtech is seeking to represent a class of potentially thousands who traded foreign currency directly with any of the banks in South Korea since. Aug. 1, 2005. The company brought its complaint just days after a nearly identical suit was filed by Haverhill Retirement System against the same group of banks. As with the Haverhill suit, Simmtech alleges that the banks have employed various tactics to manipulate the London “fix,” a global standard for currency trading levels. As Simmtech noted in its complaint, the banks have come under intense scrutiny from at least seven government regulators on three continents over their alleged forex manipulation plot. In June, the U.K. Financial Conduct Authority began looking into allegations that traders at big banks were involved in a scheme to rig foreign exchange benchmarks. The agency launched a formal investigation along with other regulators in October. The U.S. Department of Justice and the U.S. Commodity Futures Trading Commission have also been investigating the possible foreign exchange market manipulation. The Simmtech complaint revealed the regulatory watchdogs in Hong Kong and Singapore have opened their own forex investigations. UBS and Deutsche Bank revealed in their most recent regulatory filings that they were under investigation, as did Barclays in its quarterly earnings update last month. An attorney for Simmtech declined to offer further comment on the complaint, as did representatives for Citigroup, Deutsche Bank, UBS, Royal Bank of Scotland and Credit Suisse. Representatives for Barclays and JPMorgan did not immediately respond to requests for comment Tuesday. Simmtech is represented by Bong June Kim, John D. Rue and Christine M. Bae of Kim & Bae PC. Counsel information for the banks was not immediately available Tuesday. The case is Simmtech Co. Ltd. v. Barclays Bank PLC et al., case number 1:13-cv-07953, in the U.S. District Court for the Southern District of New York.
–Additional reporting by Kurt Orzeck. Editing by Katherine Rautenberg.
