Litigation worries seem to persist for major global banks.
Recently, seven banking giants were sued by A Haverhill, a
Massachusetts-based benefit fund. The banks were accused of
maneuvering WM/Reuters rates, used for determining foreign
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WM/Reuters rates are a benchmark for determining closing prices
in the foreign exchange market. The banks in the lawsuit are
Credit Suisse Group AG
Deutsche Bank AG
JPMorgan Chase & Co.
Royal Bank of Scotland Plc
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 pensions and savings
accounts that are dependant on the global foreign exchange rates.
Additionally, the Massachusetts-based benefit fund alleged that
the banks violated Section 1 of the Sherman Antitrust Act.
Earlier in June, according to a report by Bloomberg, traders at
some banks shared information illegally, carried out their own
trades prior to consumer instructions and sought control of
Manipulation in the foreign exchange as well as rigging of London
Interbank Offered Rate (LIBOR) by banks has been a cause of
headache for the regulatory authorities. Last week,
) filed a lawsuit against 9 major banks and British Bankers
Association (BBA) for their alleged role in rigging LIBOR.
) had alleged that the banks and BBA colluded together to reap
profits from LIBOR manipulations from 2007 to 2010.
WM/Reuters rates are published hourly for 160 currencies and
half-hourly for the 21 most-traded ones. Therefore, it is s a
widely accepted standard. Given this, manipulation of the same
will necessarily undermine the importance of the rate and result
in negative financial consequences.