Forex (fx) manipulation claims

Evidence of Forex (fx) manipulation emerged in 2013 and has led to investigations by regulatory agencies and market-competition authorities worldwide. The UK is inevitably a main focus as it is the largest global centre for foreign exchange trading and the Financial Conduct Authority has launched a major investigation. Click here for information about understanding forex manipulation.  

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Forex manipulation can have an important effect on forex (fx) derivatives that banks sold (mis-sold) to their customers. The advantage of the derivative was usually that at the initial stages, the customer was given a favourable rate for forex. The disadvantage was a “sting in the tail”.  Movements in the forex spot rate could lead to very costly consequences.There could be the scenario that if the spot rate reaches X then the customer has to pay 2X for the currency. This is just a simple illustrative example. Click here for information about forex derivatives mis-selling.  

So the customer may have suffered a “double whammy”:-

  • The mis-selling of the derivative.
  • The manipulation of the spot rate may trigger costly consequences under the derivative.

The legal bases for claims against banks guilty of forex manipulation are currently unclear but the following issues are worthy of consideration:-

  • Unjust enrichment. This potentially enables a customer to compel the bank to repay the profit that the bank has unjustly made.
  • Breach of a best execution obligation. Some banks have best execution policies in place which may be that the bank will endeavour to get the best price for their client.
  • Breach of confidentiality. Traders disclosed the confidential information of their customers to other traders. For instance divulging to another trader that when the spot rate reached a certain figure, the client intended to sell or buy.
  • Rescission (cancellation) of the forex purchase agreement or the derivative. The allegation would be that the bank impliedly represented that it had not engaged in any false or misleading activity in relation to the fixing of the forex rate and that the customer would not have entered into the transaction with the bank had it been aware that the bank was manipulating the rate.

Our specialist banking and financial disputes lawyers can advise on claims for Forex manipulation. Please contact a member of the team for more information or to discuss your claim.



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