Some of the world’s biggest investors are working with a U.S. law firm to prepare a fresh wave of litigation against banks accused of rigging foreign exchange markets.
BlackRock Inc., Pacific Investment Management Co. and hedge fund BlueCrest Capital Management are working with law firm Quinn Emanuel to recover losses they blame on the manipulation of currency benchmarks, according to two people familiar with the case, who asked not to be identified because nothing has been filed.
The target banks, including Barclays Plc, Citigroup Inc., HSBC Holdings Plc, JPMorgan Chase & Co., Royal Bank of Scotland Group Plc and UBS Group AG, have been fined billions of dollars for conspiring to rig FX benchmarks, one of the people said. The firm, which will probably file lawsuits in London and New York, is trying to attract additional investors.
Quinn Emanuel’s clients will likely opt out of an existing New York class action over currency manipulation that won a total of about $2 billion in settlements from HSBC, Barclays, RBS, Goldman Sachs Group Inc. and others in 2015, according to people with knowledge of the firm’s strategy.
Opting out of the class action would allow large investors to seek higher settlements by pursuing a global strategy that includes the recovery of losses from London, where a significant portion of global trades are settled. The existing class action is limited to transactions that took place in New York.
Opt-Out Fight
The two law firms that are running the existing U.S. lawsuit, Hausfeld and Scott + Scott, won’t give up control of the case without a fight.
In an April 24 letter e-mailed to U.S. District Judge Lorna Schofield, lawyers complained that "certain unnamed law firms were sending false and misleading communications to class members to persuade them to opt out of the settlements," the judge said in a court order Thursday. She set a May 12 deadline for the two firms to make a formal request as to what she should do in response.
Officials at Scott + Scott and Jim Baxter, a spokesman for Quinn Emanuel in London, declined to immediately comment. A lawyer for Hausfeld in the U.K. couldn’t immediately be reached to comment.
The Massachusetts Pension Reserves Investment Management Board and California State Teachers’ Retirement System are also considering signing up to the new action.