Barclays Plc (BARC), Citigroup Inc. (C:US) and five other major banks were sued over allegations they conspired to manipulate WM/Reuters rates used for determining foreign exchange prices.
A Haverhill, Massachusetts benefit fund filed a complaint today in Manhattan, New York federal court accusing the banks of violating U.S. antitrust law by fixing the rates. WM/Reuters rates are an industry-wide standard used in determining closing prices in the $5.3 trillion-a-day foreign exchange market, according to the complaint.
“Defendants’ manipulation of WM/Reuters rates affected the pricing of trillions of dollars’ worth of financial transactions in the United States, including FX trades and other instruments such as pensions and savings accounts that track global indices,” lawyers for the Haverhill Retirement System said in the filing.
The fund, suing on behalf of all similarly situated investors, alleges the banks violated Section 1 of the Sherman Antitrust Act. The other banks named in the complaint are Credit Suisse Group AG, Deutsche Bank AG, JPMorgan Chase & Co., Royal Bank of Scotland Plc and UBS AG.
Federal investigators have been probing possible manipulation in the foreign exchange market as well as allegations of rigging of the London interbank offered rate, or Libor, an interest rate benchmark. Yesterday, government-owned mortgage financier Fannie Mae (FNMA:US) sued nine banks claiming that their manipulation of Libor caused about $800 million of losses on swap contracts and other investments.
Bloomberg News reported in June that traders at some banks said they shared information about their positions through instant messages, executed their own trades before client orders and sought to manipulate the benchmark WM/Reuters rates. In August, Bloomberg News reported that recurring spikes in trading around the periods in which the rates are calculated suggested that dealers may have been trying to influence the benchmarks.
WM/Reuters rates are published hourly for 160 currencies and half-hourly for the 21 most-traded. They are the median of all trades in a minute-long period starting 30 seconds before the beginning of each half-hour. Rates for less-widely traded currencies are based on quotes during a two-minute window.
The data are collected and distributed by World Markets Co., a unit of Boston-based State Street Corp. (STT:US), and Thomson Reuters Corp.
Bloomberg LP, the parent company of Bloomberg News, competes with Thomson Reuters in providing news and information as well as currency-trading systems.
Mark Costiglio, a spokesman for New York-based Citigroup, and Mark Lane, a spokesman for London-based Barclays, declined to comment on the suit.
The case is Haverhill Retirement System v. Barclays Bank Plc et al, 13-cv-7789, U.S. District Court, Southern District of New York (Manhattan).
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