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FX-rigging case against 20 banks dealt setback

The Tribunal found deficiencies in referrals prepared by the CompCom and gave the body 40 days to redraft its accusations.

South Africa’s Competition Tribunal ordered antitrust investigators to clarify charges of currency manipulation against more than 20 banks, drawing out a four-year legal battle.

The Tribunal, which oversees antitrust cases, found deficiencies in referrals prepared by the Competition Commission and gave the body 40 days to redraft its accusations, according to a statement on Wednesday. However, it also rejected attempts by banks to dismiss the case.

Most banks had complained about the vagueness of the case brought by the commission and asked authorities to dismiss the allegations. Standard Bank said there was no evidence that it had participated in collusion and that the case was so contradictory and vague, the Johannesburg-based lender didn’t know how to respond.

Read: CompCom gets upper hand in forex rigging case

“The commission would still need to allege that the conduct of the respondent banks had an affect in South Africa,” the Pretoria-based Tribunal said in the statement. It should also confine its case against the lenders “to one of a single over-arching conspiracy” and provide “more detail on such a conspiracy.”

Global probe

The order is the latest chapter in a saga that started in May 2015, when the commission alleged that banks including JPMorgan Chase & Co., BNP Paribas, Bank of Merrill Lynch, Investec and Standard Chartered colluded to rig the value of the rand against the dollar. The commission eventually named 23 banks through three additional supplements to its original referral to the Tribunal.

The inquiry followed a global probe into currency manipulation that was exposed two years earlier, triggering investigations in the US and the UK. To date, more than a dozen financial institutions have paid about $11.8 billion in fines and penalties globally, with another $2.3 billion spent to compensate customers and investors.

In its statement, the Tribunal said it doesn’t have the jurisdiction to extract penalties out of banks with no presence in South Africa and that any fines would be limited to a percentage of the representative unit’s revenue in the country.

There have been accusations of errors of process on both sides. In filings in May 2017, HSBC Holdings and Investec said the commission named the wrong legal entities in its allegations. Standard Bank’s South African unit, Bank of America Merrill Lynch International and Standard New York Securities all said the traders the commission accused of manipulation on their behalf had either never worked for them nor traded the rand.

“Standard Bank remains unaware of any evidence implicating it in the alleged collusion,” it said in an email.

Citigroup Inc. agreed in January 2017 to pay a R69.5 million ($4.7-million) fine for its alleged role in manipulating the rand, while Barclays Africa, which has since been renamed Absa Group, may be exempt from a penalty because it blew the whistle on the traders’ alleged actions. Nomura International, Commerzbank, Macquarie Group, Australia & New Zealand Banking Group and Commerzbank were also identified in the probe.

“The Tribunal found that the deficiency in the commission’s pleading was located in its unwillingness to commit itself unequivocally to a particular formulation of its case,” the authority said. This “caused a lack of focus and consistency throughout the various iterations contained in the referral and subsequent supplementary documents.”

© 2019 Bloomberg L.P.

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How, when some of the colluders blew the whistle and others paid admission of guilt, do the remaining parties still have the gall to challenge the case? Citigroup did not collude with itself

When you realize that about NO ONE from the financial crisis in 2007/8 went to jail. Sounds like a precedent to me.

The rand is undervalued by about 50%, if you trade with printed dollars it is easy to kill the liquidity and become a market maker, which means big profits when you swing the market in your favour. The worst that can seemingly happen to you is that you have to give up some of your profits to pay the “Fine”, more like profit sharing. Financial systems backed by printed paper (and not actual assets like gold) are simply (legalised) fraud.

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