TIP OF THE ICEBERG FOR FOREX SETTLEMENTS
Investors duped by the chicanery of major banks during the foreign exchange market (Forex) financial scandal are currently awaiting their ‘pound of flesh’ via a slew of forthcoming legal action in the civil courts.
Corralling this expectant queue of disgruntled investors is US firm Scott+Scott LLP, which is preparing multimillion-pound lawsuits – to be lodged in the autumn – against 16 banks, including HSBC, the Royal Bank of Scotland, Barclays and US banks JP Morgan and Citigroup.
This fresh action follows the fines imposed on the banks by UK and US regulators (£2.6bn in November 2014 and $3.6bn in May 2015, respectively) – measures which, of course, did not compensate the actual victims of the Forex conspiracy.
However, in August 2015, the first concrete recompense for investors did arrive in the form of settlements totalling more than $2bn, reparations that apply only to US investors and foreign entities trading in the US.
These settlements – also with Scott+Scott at their heart and representing approximately one quarter of the Forex market – are clearly substantial, but since this market is far larger in Europe than it is in the US, the potential losses outside of the US settlement are likely to exceed what has already been seen. Indeed, the US settlements may only be the tip of the iceberg, as the next phase of the sorry Forex saga plays out in the European arena.
Fresh Forex action: the driving factors
Since the full extent of the Forex manipulation scandal first came to the attention of market regulators following a Bloomberg News report in June 2013, it was only a matter of time before the regulatory sanctions seen over the past year were succeeded by civil action. And whilst the financial fallout of the Forex scandal has certainly been hefty for banks thus far, any suggestion that they have already paid the price for their wrongdoings is given no quarter by David R. Scott, managing partner of Scott+Scott.
Oct-Dec 2015 Issue