Big banks braced for rate rigging showdown

Big banks braced for rate rigging showdown as former Treasury director says they ‘need to be held to account’

Former Treasury director Michael O’Higgins (pictured) is leading a multi-billion lawsuit against some of the UK’s biggest banks

A former senior official at the Treasury who is leading a multi-billion lawsuit against some of the UK’s biggest banks launched an impassioned plea to allow his case to proceed.

Addressing the Competition Appeal Tribunal yesterday, Michael O’Higgins said bankers accused of rigging foreign exchange markets over online chatrooms ‘need to be held to account’.

Following a hearing in London, which began yesterday, and is due to end later this week, a judge will decide whether to allow the legal claim spearheaded by O’Higgins against banks such as Barclays, Natwest, JP Morgan and Citigroup to go ahead.

Traders working for the banks exchanged sensitive information and trading plans between 2007 and 2013 in online chatrooms.

This allowed them to make informed decisions about when to buy or sell a currency they held – but could have caused bank customers, including pension funds, asset managers, hedge funds and corporates, to lose hundreds of millions of pounds.

O’Higgins wants to lead a class action-style lawsuit on behalf of all affected customers. 

Two US law firms, Scott+Scott and Hausfeld, are vying for the right to seek damages of at least £1billion. The hearing will determine which of the pair – if either – is allowed to press their case.

‘My time at the Treasury pretty much coincided with the global financial crisis and its aftermath. 

As I saw those at Her Majesty’s Treasury working tirelessly to save the banking system, little did I, or they, know that people in some of the major banks were actively engaging in anti-competitive cartel behaviour in the foreign exchange markets,’ O’Higgins said.

The banks have already been fined more than £900million by the European Commission for participating in cartels.