Appeals Filed as FX Class Action Continues on Opt-In Basis – DB & Derisking

In 2019, the European Commission found that merchants employed by banks, who were involved in spot foreign exchange trading, had effectively formed a cartel, exchanging sensitive current and prospective commercial information about their activities via online chat rooms. line.

The commission imposed a collective £1billion fine, but the money was not used to compensate companies – including pension funds – whose investments were damaged by the cartel’s actions.

Two class action claims were subsequently submitted, one by Michael O’Higgins, former chairman of the Local Pensions Partnership and former chairman of the Pensions Regulator, and the other by Phillip Evans of FX Claim UK and former Inquiry Chairman at the Competition and market authority.

If these claims are prevented from proceeding on an opt-out basis, the result will be that tens of thousands of individuals and businesses will be excluded from the possibility of recovering compensation in relation to anti-competitive behavior acknowledged by banks.

Phillip Evans, FX Claim UK

If successful, pension schemes that have engaged in foreign currency transactions could receive compensation which, in 2019, O’Higgins estimated could amount to billions of pounds.

A similar class action suit against 16 banks in the US saw settlements totaling $2.3bn (£1.75bn).

The case proceeds on the basis of opt-in

The CAT met to consider whether the claims could be dealt with as a class action and, if so, on an opt-out basis. He also considered which of the two potential class representatives should take the claim forward.

Although the CAT felt that the claims should indeed be treated as class proceedings, concerns about the strength of the claims and the feasibility of an opt-out approach forced it to prefer that potential claimants have to enroll in the class action, although one of the three-member tribunal disagreed with this opinion.

Since the question of transportation – who can move the case forward as a representative – only arises when a class action proceeds on an opt-out basis, the court did not have to decide which of ‘Evans and O’Higgins would be best suited for carrying purposes, although he hinted that, if forced to choose, Evans’ claim would be preferred.

The membership decision will be appealed.

Evans said that while pleased the court decided the claims were indeed amenable to class action, he was disappointed with its refusal to proceed on an opt-out basis.

“Based on my experience in the consumer welfare field, I have first-hand knowledge of the practical difficulties of opt-in legal proceedings, which I have presented in court. In my opinion, the CAT has underestimated these challenges, even though one of the three CAT members acknowledged this and said the procedure should be certified on an opt-out basis,” he explained.

In his dissenting opinion, tribunal member Paul Lomas said, “I fail to see how the broader goals of access to justice are achieved by choosing an (opt-in) method that (i) will not happen du all or who (ii) if this happened, it would mean that the overwhelming number of what is likely to be more than 40,000 proposed class members did not opt ​​out.

Evans said: “If these claims are prevented from proceeding on a non-participating basis, the result will be that tens of thousands of individuals and businesses will be excluded from the possibility of recovering compensation in relation to anti-competitive conduct. recognized by banks. .

“This would be contrary to the principle of access to justice that underpins the class action regime. These points were recognized in the dissenting opinion of Mr. Lomas, which would have granted certification on the basis of the opt-out. I therefore intend to appeal.

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Michael O’Higgins also said he was “extremely disappointed” with the decision, arguing that the exchange cartel case is “exactly the type of claim that opt-out procedures were introduced to facilitate in order to provide access bringing justice to all entities affected by the illegal behavior of the cartelists”.

“The application I submitted was based on solid foundations, sound legal and economic principles and evidence from leading experts. In particular, this followed the binding decisions of the European Commission in which the banks admitted their responsibility and similar procedures in the United States, where the banks accepted a settlement of more than 2 billion dollars, “he said. he declares.

“In order to best serve the class we seek to represent, we have decided to appeal yesterday’s decision.”