Credit Suisse discussing ‘conspiracy window’, jurors told

(Bloomberg) – Forex traders at Credit Suisse Group AG participated in a price-fixing conspiracy to benefit themselves at the expense of their clients, a pension fund lawyer suing the bank said in closing arguments.

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“They weren’t in competition with each other,” attorney Christopher Burke said in Manhattan federal court on Wednesday. “They wanted to beat the customers.”

The heart of the case brought by the funds and other exchange clients was more than 2,500 online discussions between traders between 2007 and 2013. Jurors spent more than a week reading discussion transcripts which, according to Burke, proved that Credit Suisse and 15 other banks were in collusion. fixing bid-ask spreads in a $5.3 trillion-a-day market.

“We saw a lot of cats,” Burke said. “They are our window into the conspiracy.”

‘Shake Things Up’

Credit Suisse was the latest holdout among the group of banking giants initially targeted in the lawsuit, including Citigroup Inc., UBS Group AG, Barclays Plc, JPMorgan Chase & Co., HSBC Holdings Plc. and Deutsche Bank AG, which settled claims totaling $2.3 billion.

A Credit Suisse lawyer said in closing arguments for the defense that there was no collusion, saying the bank’s foreign exchange trading market share tripled during the alleged plot.

“Credit Suisse wanted to shake things up. They wanted to keep customers away from other banks,” Herbert Washer told jurors. “Credit Suisse was not conspiring. It was competition. »

Washer also reminded jurors that expert witnesses for the defense had said the forex market was too big to be fixed by small groups of traders in chat rooms.

The lawsuit comes at a time when Credit Suisse is struggling to reassure investors of its capital strength and liquidity ahead of a possible restructuring. The Swiss lender agreed Monday 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.

U.S. District Judge Lorna Schofield on Wednesday asked jurors to consider two questions: Was there a conspiracy to fix currency spreads and, if so, did Credit Suisse knowingly participate in it?

According to Bloomberg Intelligence, the bank at one point faced potential liability of $19 billion, based on the possibility of standard damages in price-fixing cases. But Schofield ruled that if Credit Suisse loses on both antitrust conspiracy issues, exchange clients must prove their damages in separate individual proceedings.

Guilty pleas

Prosecutors opened investigations into allegations of forex market rigging a decade ago. Burke told jurors five banks had pleaded guilty to price-fixing charges: Citigroup, JPMorgan Chase, Barclays Plc, Royal Bank of Scotland Plc and UBS AG. Washer said these banks admitted to crimes involving two chat rooms in which no Credit Suisse traders had participated.

Burke reminded jurors that 26 forex traders — including three from Credit Suisse — refused to answer questions about pricing, instead arguing their Fifth Amendment rights against self-incrimination. And Credit Suisse traders participated in 726 of the discussions that were entered as evidence in the case, he said.

Credit Suisse settled in July, on undisclosed terms, a separate case with nearly 1,300 investment firms and government entities that opted out of the pending trial, 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).

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