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Banking industry

London-Based Banks Face Multi-Billion Dollar Compensation Claims in FX Market Manipulation Scandal

Strategic Insights

— 1 min read

In a devastating blow to London-based banks, a wave of compensation claims is on the horizon in the UK following the manipulation of foreign exchange markets between 2007 and 2013. As the European Commission prepares to publish its findings by the end of summer, investors, pension funds, and companies can already file claims in Europe, with potential damages reaching multi-billion dollars. Twelve major banks, accounting for 98% of spot trading volume in the USA, are already facing civil action in the USA, with further action likely against other banks as more information is uncovered.

Key Takeaways:

  • Twelve major banks, including Bank of America, Barclays, BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan, Morgan Stanley, RBS, and UBS, are facing civil action in the USA for manipulating foreign exchange markets between 2007 and 2013.
  • These banks account for 98% of spot trading volume in the USA.
  • Scott+Scott, a law firm, has launched a civil action against the twelve banks in the USA and plans to open an office in London to facilitate claims in the UK.
  • To date, claims have only been launched in the USA, but it is expected that claims in the UK will be materially bigger due to London's significant share of the global FX market.
  • Over 40% of the global FX market, worth $5.3 trillion (£4.3 trillion) per day, is traded through London.
  • Scott+Scott has developed techniques to calculate the exact loss suffered by investors based on historic trading data, allowing claimants to know how much the manipulation costs them.

Statistics:

  • 98% of spot trading volume in the USA is attributed to the twelve banks facing civil action.
  • Over 40% of the global FX market, worth $5.3 trillion (£4.3 trillion) per day, is traded through London.
  • $4.3 trillion (approximately) is the daily value of the FX market traded through London.
  • The European Commission is expected to publish its findings by the end of summer.

Sources:

  • Scott+Scott announcement, October 2013
  • European Commission publication, expected by the end of summer 2015 (note: no publication date provided in the original source material)
  • "London-based banks 'largest' FX traders" by Chris Relief (PRNewswire) July 14, 2015

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