Banks' appeal dismissed in forex manipulation case

The Competition Appeal Court on Friday set aside a Competition Tribunal order which had partially ruled in favour of 17 banks named in a rand-dollar forex manipulation case.

The Tribunal previously rejected the banks' attempt to have the referral against them dismissed, but ordered the Commission to redraft its charge sheet within 40 days. 

Originally, the Commission sought an order from the Tribunal declaring that the banks contravened the Competition Act. Further, it sought an order declaring that the banks are liable for the payment of an administrative penalty equal to 10% of their annual turnover.

The CAC has now ordered that the Competition Commission must file a new charge sheet within 40 days to replace all previous affidavits, and must set out the facts it relies on to allege it was foreseeable that the alleged conduct by the banks involved would have "direct or immediate, and substantial effect in South Africa".

The Commission must now confine its case to one of a single, over-arching conspiracy, and it is not restricted from alleging that this may be founded on "an agreement, arrangement or concerted practice".

The new affidavit must, in addition, set out the facts on which the Commission relies to allege that there are adequate connecting factors between the banks and the Tribunal's jurisdiction.

It has also been ordered to amend its referral not to include paragraphs referring to a JP Morgan entity.

The matter dates back to 2017, when the Commission referred a collusion case involving 17 banks to the Tribunal. The Commission, since April 2015, had investigated price fixing and market allocation in the trading of foreign currency pairs involving the rand.

Three domestic banks – Absa, Standard Bank and Investec – were among those the Commission investigated, Fin24 previously reported.

The other 14 banks investigated were Bank of America Merrill Lynch International, BNP Paribas, JP Morgan Chase & Co, JP Morgan Chase Bank, Standard New York Securities, HSBC Bank, Standard Chartered Bank, Credit Suisse Group, Commerzbank, Australia and New Zealand Banking Group, Nomura International, Macquarie Bank, Citibank, Barclays Capital and Barclays Bank.

Citibank had in the past agreed to pay a R69.5m fine, while Absa – which apologised for its involvement and agreed to help the regulator with its investigation – was not fined, Bloomberg previously reported. Standard Chartered had pleaded guilty to manipulating currencies between 2007 and 2013. The bank had reached a consent agreement with the New York State Department of Financial Services to pay $40m (about R530m), Fin24 reported at the time.

Fin24 reported earlier in February this year that the Constitutional Court has set aside an earlier decision by the CAC ordering the Commission to grant access to its investigation records before the banks in the collusion case answered the case against them.

* Compiled by Carin Smith 

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