More banks named in forex collusion case

Cape Town – More banks have been named in the forex collusion case, according to a supplementary affidavit filed by the Competition Commission on December 21, 2017.

The affidavit, made available by the Competition Tribunal on Friday, was filed by the commission’s attorney Mfundo Ngobese. It shows that the commission wants to include additional respondents. The banks were allegedly involved in fixing bids in September 2007.

This comes following an investigation by the commission which started in April 2015 and was concluded early in 2017. The commission referred the matter to the Competition Tribunal. Initially, a total of 17 banks were allegedly involved in price-fixing and market allocation in the trading of foreign currency pairs involving the rand.  

The additional banks named in the affidavit are Investec Bank Limited, which is a co-respondent with Investec Limited. The bank was allegedly involved in fixing bids and offer prices on the trading platform and those quoted to customers, according to the affidavit.

Other banks named include HSBC USA, Merrill Lynch Pierce Fenner and Smith Incorporated – a subsidiary of Bank of America Corporation North America, Bank of America National Association – the parent company of Bank of America Merrill Lynch which is already a respondent in the case, and Credit Suisse Securities.

In the affidavit, Ngobese asserts that the inclusion of these parties won’t prejudice existing parties and that Bank of America Merrill Lynch, Investec Limited and HSBC Bank stressed the necessity that the additional banks be joined.

The affidavit also names the traders involved in fixing bids and details the conversations they had with each other on the Bloomberg chatroom, the platform used to make arrangements.

Delays to forex case

As a result, the hearing of the exception applications which was scheduled this past week, January 24- 26, had been postponed. Instead, a closed pre-hearing was held on January 24, 2018 for parties to determine a way forward for the matter. 

So far 14 banks have filed exception applications. These include Bank of America Merrill Lynch, BNP Paribas, JPMorgan Chase & Co, JPMorgan Chase Bank of North America, Standard Bank of South Africa, Investec and Nomura International among others. 

Fin24 is of the understanding that the exception applications allow banks to make contestations. One example is a contestation that the commission did not have jurisdiction to conduct the investigation. If the tribunal rules in favour of the respondents during the exception application hearings, then the actual case will fall away. 

Previously, City Press reported that the commission was getting “irked” by efforts of banks to delay the actual case.

At the time, the commission wanted to have each bank’s exception ruled on separately, but the banks wanted their objections to be combined. This means the commission would have to produce a new referral to the tribunal, City Press reported.

In August 2017, the commission said it was open to reaching settlements with the banks implicated in the case, but not the same kind of deals as those banks which had approached the commission earlier.

READ: Competition Commission won’t take it easy on banks hoping to settle on forex cartel matter

“The commission doesn’t rule out any possible settlement discussion with any bank in this litigation – what we are saying is that those who have wasted time and have sought to abuse the process must not expect the same as those who settled earlier,” spokesperson Sipho Ngema told Fin24 in an emailed response.

Citigroup is one of the banks which agreed to pay a R69.5m fine and said it would cooperate by making witnesses available to prosecute the other banks. ABSA was the other bank, which had apologised for its involvement and the commission decided not to issue an administrative penalty against the bank.

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