Credit Suisse Group won a class-action trial in which the bank was accused of participating in a sprawling conspiracy to fix prices in the multitrillion-dollar foreign-exchange market.
Jurors in New York on Thursday returned a verdict for Credit Suisse, which denied claims it colluded with other banking giants to fix the bid-ask spreads for currency trades to profit at the expense of their customers.
The verdict is a vindication of Credit Suisse's decision to defend the case as the sole holdout among 16 banks named in the suit, which included Citigroup, UBS Group, Barclays, JPMorgan Chase, HSBC Holdings and Deutsche Bank. Public pension funds and other foreign exchange customers sued as a group, claiming traders routinely used online chat rooms to agree on pricing from late 2007 through 2013.
At the heart of the trial, which began Oct. 11, were more than 2,500 online chats among traders, in which they shared news, gossip and off-color jokes in addition to information about trading spreads.
Credit Suisse witnesses told jurors the chat rooms were useful for exchanging market color and determining the liquidity of the currency market, which reached volumes as high as $5.3 trillion a day during the alleged conspiracy.
Credit Suisse experts told jurors the market was too big to be rigged by small numbers of traders in online chat rooms. And the bank argued that it was focused on gaining market share in hopes of vaulting into a top-10 of currency traders. Price fixing was the last thing on traders' minds at a time they were seeking to undercut the competition on price, witnesses for the bank testified.
The trial came at a time when Credit Suisse is working to reassure investors about its capital strength and liquidity before a possible restructuring. The Swiss lender on Monday agreed to pay $495 million to resolve the biggest remaining case related to its sale of residential mortgage-backed securities that contributed to the 2008 financial crisis. New Jersey's attorney general filed the case in 2013.
The bank at one point faced potential liability of $19 billion, based on the possibility of triple damages that is standard in price-fixing cases, according to Bloomberg Intelligence. But pretrial rulings by U.S. District Judge Lorna Schofield limited the scope of the trial to two main questions: was there a conspiracy to fix foreign-exchange spreads and, if so, did Credit Suisse knowingly take part in it?
Prosecutors began investigations into alleged foreign-exchange market-rigging a decade ago. Five banks pleaded guilty to felony price-fixing charges: Citigroup, JPMorgan Chase, Barclays, Royal Bank of Scotland and UBS. Jurors in the New York case heard evidence that 26 foreign exchange traders — including three from Credit Suisse — declined to answer price-fixing questions, instead pleading their Fifth Amendment right against self-incrimination. And Credit Suisse traders participated in 726 of the chats that were entered as evidence in the case, he said.
Credit Suisse in July settled, on undisclosed terms, a separate case with almost 1,300 investment firms and government entities that opted out of the case currently being tried, the bank said.
The case is In Re Foreign Exchange Benchmark Rates Antitrust Litigation, 13-cv-7789, US District Court, Southern District of New York (Manhattan).
