UK Supreme Court Overturns Bank FX Manipulation Case

The UK Supreme Court has reversed a UK Court of Appeal judgement over whether a case against six banks for FX market manipulation could proceed, instead backing an earlier judgement by the UK’s Competition Appeals Tribunal (CAT), that the case for proceeding as an “opt-out” basis was “weak”.

In 2022, the CAT ruling found that the case had to be conducted on an “opt-in” basis, meaning plaintiffs had to apply to be a part of the suit. The CAT said the case could not viably continue in these conditions. The UK’s Court of Appeals decision, however, in 2023 reversed that judgement, deciding that, the case could proceed with potential plaintiffs having to explicitly opt out of the action.

The case relates to chat room activity, largely on Bloomberg terminals, in which dealers from shared information inappropriately, leading to a host of banks admitting fault and settling cases with numerous regulators. The UK Supreme Court notes that these were “settlement decisions” whereby the banks admitted their participation in the anti-competitive behaviour in return for immunity from fine or a reduced fine.

The decision relates specifically to an appeal brought by Barclays, Citi, JP Morgan, MUFG, NatWest and UBS.

“In our view, the Tribunal’s conclusion that Mr Evans’ claim was weak and that this was a powerful factor militating against certification of the proceedings on an opt-out basis was fully and convincingly reasoned and there was no ground on which the Court of Appeal was justified in interfering with it,” the judges write. “The weakness of the claim as assessed by the Tribunal – and the conclusion that no plausible case on causation had been articulated –  was properly regarded by the Tribunal as a factor weighing strongly against opt-out proceedings.

“The merits of the claim are not a neutral factor,” they add. “In the present case, this factor indicated that affording the claimants the procedural advantages and exposing the defendants to the additional burdens and “leveraging effect” of opt-out proceedings was not justified by the perceived merits of the claim.”

While the FX industry will be hoping that this brings to an end the long-running saga in the UK, this may not be the case, given a statement from Phillip Evans, former head of the UK’s Competition Markets Authority, who brought the case with law firm Hausfeld. In a statement, Evans, says, “I will be taking time with my legal team to carefully consider the implications of this judgment and to determine what options remain available to pursue justice for those affected.”

He adds, “The UK was the epicentre of this cartel: the traders operated from London dealing rooms and even named their chatrooms after their morning commute from Essex into the City. The banks have admitted their wrongdoing, paid over €1.1 billion in regulatory fines, and handed more than $2.4 billion in compensation to victims in the United States, Canada and Australia. Yet here in the UK, where the manipulation actually took place, the only parties who have been able to pursue claims are a small group of institutional investors with pockets deep enough to fund High Court litigation. Everyone else has been left behind. That cannot be right.”

Anthony Maton, partner and global co-chair at Hausfeld, adds, “We’ve faced a lot of legal argument about the merits of these claims, without the banks ever disclosing a single underlying document about their illegal conduct – no trading records, no chatroom logs, nothing. But the essential point is simple: systemic sharing of confidential trading information between competitors distorts the market and affects prices. UK victims deserve more than a theoretical chance to prove it…We will work closely with Mr Evans to evaluate all available options.”