Twelve major banks seek dismissal of forex price-rigging lawsuit

By Joseph Ax

NEW YORK, May 30 (Reuters) - Twelve major banks asked a U.S.judge on Friday to throw out a consolidated antitrust lawsuitaccusing them of colluding to rig prices in the $5trillion-a-day foreign exchange market, saying the plaintiffinvestors had failed to properly allege the existence of aconspiracy.

Investors, including the city of Philadelphia and a numberof hedge funds and pension funds, accused the banks ofconspiring since January 2003 to manipulate the WM/ReutersClosing Spot Rates, using chat rooms, instant messages andemail.

The defendants - Bank of America Corp, Barclays Plc, BNP Paribas SA, Citigroup Inc, CreditSuisse Group AG, Deutsche Bank AG, GoldmanSachs Group Inc, HSBC Holdings Plc, JPMorganChase & Co, Morgan Stanley, Royal Bank ofScotland Group Plc and UBS AG - filed a jointmotion to dismiss the case on Friday in U.S. District Court inManhattan.

"Despite their breathtaking scope, the complaints do notplead a single fact about a single instance in which a singledefendant engaged in even one concerted act to manipulate anyparticular currency rate," the banks wrote. "Nor do theyidentify a single transaction by a plaintiff or any factualbasis for a claim that any plaintiff has been injured by analleged conspiracy to manipulate benchmark exchange rates."

The banks also asserted that the theory underlying theconspiracy allegations "makes no economic sense." Any attempt toinflate one currency artificially would deflate the relativevalue of other currencies against which it is traded, the banksargued, and dealers cannot know in advance which currencies theywill be buying or selling each day.

Christopher Burke, one of the lead lawyers for theplaintiffs, declined to comment immediately on Friday.

The case is proceeding against a backdrop of civil andcriminal probes worldwide into whether banks rigged prices toboost profit at the expense of customers and investors.

The 12 defendants have an 84 percent global market share andserve as counterparties in 98 percent of U.S. spot volume,according to the lawsuit.

In their complaint, the investors said employees of thedefendants used such names as The Cartel, The Bandits' Club andThe Mafia to swap confidential customer orders and tradingpositions and colluded to set prices through such tactics as"front running/trading ahead," "banging the close" and "paintingthe screen."

U.S. District Judge Lorna Schofield is overseeing thelitigation.

The case is In re: Foreign Exchange Benchmark RatesAntitrust Litigation, U.S. District Court, Southern District ofNew York, No. 13-07789. (Reporting by Joseph Ax; Editing by Leslie Adler)