Traders at 5 global banks colluded in chat rooms named ‘The Cartel’ and ‘The Mafia’ to rig foreign exchange rates, lawsuit claims

  • Law firm Maurice Blackburn has filed a class action lawsuit in the Federal Court of Australia against global banks UBS, Barclays, Citi, Royal Bank of Scotland and JP Morgan for alleged breaches of competition law.
  • The lawsuit alleges that employees in the trading arms of the institutions allegedly colluded to manipulate foreign exchange benchmark rates.
  • The traders allegedly communicated in online chat rooms called ‘The Cartel’, ‘The Bandits’ Club’ and ‘The Mafia’.

Global banks UBS, Barclays, Citi, Royal Bank of Scotland and JP Morgan are facing a fresh legal challenge in Australia, accusing them of conducting in cartel behaviour.

Law firm Maurice Blackburn filed a class action lawsuit in the Federal Court on Monday against the five financial institutions, claiming the banks worked together to rig foreign exchange rates between 1 January 2008 and 15 October 2013.

“Traders allegedly used chat rooms bearing names such as ‘The Cartel’, ‘The Bandits’ Club’, and ‘The Mafia’, and communicated directly with each other to coordinate the manipulation of [foreign exchange] benchmark rates, control the pricing of spreads and to trigger client stop loss orders and limit orders,” a statement on the Maurice Blackburn website said.

The behaviour in question has already been the subject of regulatory investigation in the US and Canada and has resulted in payments to consumers of more than US$2.3 billion and CA$107 million, the statement said.

Now the plaintiff firm will be hoping a similar outcome might be possible down under.

The class action is open to Aussie consumers and businesses who engaged in more than $500,000 worth of forex transactions during the relevant five-year period. You can assess your eligibility to register as a claimant in the lawsuit here.

Greg Wisbey, who runs a medical equipment importation business, will act as lead plaintiff in the case and said the “price rigging” by the banks had an adverse impact on his business and others like it.

“I rely on forex trading because my business needs to trade with international companies, but to have been subjected to an uneven playing field and paying an inflated price for no good reason, well that’s just unfair and hurts Australian businesses like mine,” Wisbey said in a statement on the Maurice Blackburn website.

Business Insider Australia has requested comment from UBS and JP Morgan in relation to the lawsuit and will update the article accordingly. Citi declined to comment.