February 25, 2016

The Increasing Application of Antitrust Claims to Securities Transactions

There is potential for high-value settlements and high-stakes litigation

Peter M. Saparoff, Robert G. Kidwell, Joel D. Rothman, and Kevin C. Mortimer

While the allegations in the antitrust cases generally involve the activity of financial institutions, rather than securities issuers, counsel involved in securities litigation should be aware of these cases because they may represent an expansion in investor class action litigation with the potential for high-value settlements and high-stakes litigation. For example, settlements to date in In re ForEx have totaled over $2.2 billion.

The Foreign Exchange Antitrust Litigation: A Case Study
The case involving the alleged manipulation of foreign currency exchange rates provides a good example of the types of allegations raised in these antitrust cases, as well as the interplay between private class action litigation and government enforcement of the antitrust laws.

The foreign currency exchange (FX) market is the largest and most actively traded financial market in the world. See Complaint ¶¶ 2, 77, In re ForEx. There are three types of FX instruments that account for 95 percent of the market’s transactions: spot trades, outright forwards, and FX swaps. These instruments are agreements to exchange sums of currency at an agreed-on exchange rate on a particular value date. WM/Reuters publishes benchmark rates and is the most widely used publisher.

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