Antitrust Law Daily HSBC, UBS settle ISDAfix manipulation conspiracy suit
Thursday, July 13, 2017

HSBC, UBS settle ISDAfix manipulation conspiracy suit

By Jody Coultas, J.D.

The federal district court in New York City preliminarily approved settlements between institutional investors and HSBC Holdings Plc and UBS Group AG, resolving allegations that the banks conspired to manipulate a benchmark interest rate incorporated into a broad range of financial derivatives. HSBC and UBS individually agreed to pay $14 million each, bringing the total payout from 10 settling banks to $408.5 million in the putative class action. HSBC and UBS denied wrongdoing under the settlements (Alaska Electrical Pension Fund v. Bank of America Corp., July 12, 2017, Furman, J.).

In April 2014, several institutional investors filed suit against the banks and inter-dealer broker ICAP Capital Markets LLC, alleging that the defendants used their respective roles in the rate-setting process to manipulate the U.S. Dollar ISDAfix for financial gain. Specifically, investors claimed that the banks manipulated daily ISDAfix rates to benefit their own trading positions and ICAP assisted in the manipulation in order to earn brokerage commissions.

In March 2016, the New York court denied a motion by the banks to dismiss the Sherman Act claim for lack of standing. Shortly thereafter, in May 2016, seven bank defendants—Bank of America Corporation, Barclays Bank PLC, Citigroup, Inc., Credit Suisse AG, Deutsche Bank, AG, JPMorgan Chase & Co., and The Royal Bank of Scotland Group PLC—agreed to pay $324 million to settle the litigation. The plaintiffs subsequently settled with Goldman Sachs for $56.5 million. The total settlements in the matter would be valued at $408.5 million.

In the present memorandum in support of the motion for settlement, the plaintiffs state that the proposed settlements were the product of arm’s-length negotiations conducted by experienced counsel knowledgeable in complex class litigation. The settlements fall within the range of preliminary approval in light of: (1) the complexity, expense, and likely duration of the litigation; (2) class counsel’s engagement in sufficient investigation to make an intelligent appraisal of the settlements; (3) the risks of establishing liability and damages; (4) the ability of the settling defendants to withstand a greater judgment; and (5) the likelihood of obtaining recovery at trial.

The proposed settlements satisfy the requirements under Federal Rule of Civil Procedure 23 for preliminary approval, it was asserted. The proposed class is sufficiently numerous that joinder of all members is impracticable and there are questions of law or fact common to the class. The claims or defenses of the class representatives are typical of the claims or defenses of the class and the class representatives do not have antagonistic interests to that of the class and have retained qualified, experienced counsel.

Additionally, there are questions of law or fact common to class members that predominate over any questions affecting only individual class members and a class action is superior to other available methods for the adjudication of the controversy.

Finally, the plaintiffs propose preliminarily certifying for settlement purposes a class of all persons or entities that entered into, received or made payments on, terminated, transacted in, or held an ISDAfix instrument from January 1, 2006 through January 31, 2014.

Any differences between the agreements as to UBS and HSBC and the prior preliminarily approved settlement agreements are inconsequential to the class action settlement process and the fairness of the agreements to all Settlement Class members, according to the motion. If approved, all of the pending settlements may efficiently proceed through the settlement approval process, class notice, the claims process, distribution, and other settlement procedures together.

The case is No. 14-CV-7126 (JMF).

Attorneys: Daniel L. Brockett, Daniel P. Cunningham, Marc L. Greenwald, Jonathan B. Oblak, Steig D. Olson, and Jeremy D. Andersen (Quinn Emanuel Urquhart & Sullivan, LLP); Christopher M. Burke, Walter W. Noss, Kristen M. Anderson, Julie A. Kearns, David R. Scott, Donald A. Broggi, Sylvia M. Sokol, Peter A. Barile III, and Thomas K. Boardman (Scott+Scott, Attorneys at Law, LLP); and Patrick J. Coughlin, David W. Mitchell, and Brian O. O’Mara (Robbins Geller Rudman & Dowd LLP) for settlement class. James Matthew Goodin (Locke Lord LLP) for HSBC Bank USA, N.A. Edwin R. DeYoung (Locke Lord Bissell & Liddell LLP) for HSBC Bank PLC. Peter Sullivan (Gibson, Dunn & Crutcher, LLP) for UBS AG.

Companies: HSBC Holdings plc; UBS Group AG; Bank of America Corporation; Barclays Bank PLC; Citigroup, Inc.; Credit Suisse AG; Deutsche Bank, AG; JPMorgan Chase & Co.; The Royal Bank of Scotland Group PLC

MainStory: TopStory Antitrust NewYorkNews

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