JPMorgan Chase & Co. (JPM) has agreed to shell out $100 million as settlement in response to a U.S. antitrust lawsuit filed in 2013 by investors against 12 major banks including JPMorgan for price manipulations in the foreign exchange (FX) market, as reported by Reuters.
A letter filed with the US district court in Manhattan revealed the settlement between both the parties. However, the court’s approval is still pending and the settlement papers are expected to be submitted in the court this month.
About the Lawsuit
In 2013, several investors including hedge funds, public pension funds, the Philadelphia city and other market participants filed a complaint accusing 12 banks of manipulating WM/Reuters rates through chat rooms, e-mail and instant messaging since Jan 2003. WM/Reuters rates are a benchmark for determining closing prices in the FX market.
The plaintiffs alleged that the banks’ manipulation of WM/Reuters rates impacted the value of financial transactions in the U.S., including foreign exchange trade. Further, the plaintiffs claimed that these also negatively affected the pension and savings accounts that are dependant on global foreign exchange rates.
Along with JPMorgan, the accused banks included other Wall Street giants like Bank of America Corporation (BAC), The Goldman Sachs Group, Inc. (GS), Morgan Stanley (MS) and Citigroup Inc. as well as foreign banks such as UBS AG, Credit Suisse Group AG, HSBC Holdings plc, Barclays PLC, The Royal Bank of Scotland Group plc, BNP Paribas SA and Deutsche Bank AG.
Similar Settlement
In Nov 2014, JPMorgan paid a settlement charge of around $1.0 billion to several regulatory authorities in connection to another investigation concerning similar allegations. This was part of a global investigation by U.S., British and Swiss regulators into alleged FX market manipulation, which resulted in a $4.3 billion settlement by six major global banks.
Our Take
JPMorgan made a smart move by consenting to pay settlement charges and becoming the first bank to take efforts to resolve the 2013 lawsuit. The step taken by the largest U.S. bank will encourage the other indicted banks to follow suit to save them from further discredit.
Currently, JPMorgan sports a Zacks Rank #3 (Hold).
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