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(Adds regulatory settlements, changes in bank practices, Liborlitigation)
By Jonathan Stempel
NEW YORK, Jan 28 (Reuters) - A federal judge on Wednesdaysaid U.S. investors may pursue a nationwide antitrust lawsuitaccusing 12 major banks of rigging prices in the $5.3trillion-a-day foreign exchange market.
U.S. District Judge Lorna Schofield in Manhattan rejectedthe defendants' arguments that the case should be dismissedbecause of a lack of evidence that they colluded to manipulatethe WM/Reuters Closing Spot Rates, known as the Fix, or thatthey impeded competition and caused harm.
"Fairly read, the U.S. complaint adequately alleges thatdefendants engaged in a long-running conspiracy to manipulatethe Fix to defendants' advantage," Schofield wrote in a 30-pagedecision.
The bank defendants include Bank of America Corp,Barclays Plc, BNP Paribas SA, Citigroup Inc, Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc, HSBC Holdings Plc, JPMorgan Chase & Co, Morgan Stanley,Royal Bank of Scotland Group Plc and UBS AG.
According to the 2013 lawsuit, these banks have held an 84percent global market share in currency trading, and werecounterparties in 98 percent of U.S. spot volume.
The lawsuit is separate from criminal and civil probesworldwide into whether banks rigged currency rates to boostprofit at the expense of customers and investors.
Six of the defendant banks have accepted more than $4.3billion of civil fines from U.S. and European regulators, ninehave banned traders from multibank chat rooms, and all 12 haveoverseen the suspension or departure of more than 30 employeeslinked to currency operations, Schofield said.
CARTEL, BANDITS' CLUB, MAFIA
In the complaint, investors including the city ofPhiladelphia, hedge funds and public pension funds accused thebanks of having conspired since January 2003 in chat rooms,instant messages and emails to manipulate the Fix.
They said traders manipulated prices through tactics such as"front running," "banging the close" and "painting the screen,"using disguised names to swap confidential orders.
"Even the names the FX traders gave their chatrooms - suchas 'The Cartel,' 'The Bandits' Club' and 'The Mafia' - supportthe inference that the chat rooms were used for anticompetitivepurposes," Schofield wrote.
The judge said it did not matter that similar litigationalleging manipulation of the London Interbank Offered Rate wasdismissed in 2013. She said that dismissal was based on a lackof antitrust injury, not because the claims were implausible.
JPMorgan on Jan. 5 settled its portion of the case for about$100 million, according to court records and a person familiarwith the matter. Settlement papers are expectedto be filed this week.
Michael Hausfeld, a lawyer for the U.S. investors, in aphone interview said his clients are pleased with the decision,and are prepared to review banks' records to determine "whatthey did, when they did it, why and how."
HSBC and UBS did not respond to requests for comment. Theremaining banks other than JPMorgan declined to comment.
Schofield also dismissed two related lawsuits by foreignplaintiffs.
The case is In re: Foreign Exchange Benchmark RatesAntitrust Litigation, U.S. District Court, Southern District ofNew York, No. 13-07789. (Reporting by Jonathan Stempel in New York; Additionalreporting by Karen Freifeld; Editing by Leslie Adler and LisaShumaker)
