Investec and Standard shoot holes in forex manipulation case
Citibank paid the commission a R70m settlement, while Barclays plc, Barclays Capital and Absa are co-operating to be granted leniency
Investec and Standard Bank have shot holes in the Competition Commission’s collusion case implicating the banks’ currency traders, saying in court filings that the commission had provided no factual evidence to support its allegations.
Investec did not even know how to plead since it could not tell, from the commission’s "vague and embarrassing" referral affidavit, what case it was being called upon to meet, group legal adviser Avrom Krengel said in papers.
A total of 14 banks referred to the Competition Tribunal for alleged price fixing and market allocation in the trading of foreign currency pairs involving the rand have filed exception applications, published on the commission’s website this week, disputing the referral.
The case was referred to the tribunal in February.
Citibank paid the commission a R70m settlement, while Barclays plc, Barclays Capital and Absa are co-operating to be granted leniency.
"The [commission’s] affidavit makes sweeping statements, covering many years, with only vague allegations of misconduct on the part of the respondents. Investec is accordingly unable to discern in respect of what particular conduct it is alleged to have violated sections … of the Competition Act," Krengel said.
In his affidavit, Krengel explained that the commission had provided no specifics on when, how or with whom collusion took place. "[The commission] does not give the dates on which, or places at which, the agreements [to fix prices and divide markets] were entered into, with which of the respondents or by whom on behalf of the parties they were concluded, or what their terms were."
The commission had made repeated reference to conversations that took place on the Bloomberg instant messaging system, but provided no records of these conversations despite being in a position to access this data with the assistance of any Bloomberg user, Krengel said.
The commission did not advance evidence to support allegations that traders used chatrooms and telephones to collude, Standard Bank’s group counsel, Ian Sinton said in papers. "How and when these chats and … conversations are said to have been conducted and between whom, is not explained, and nor are the parties to each of these identified."
In a separate affidavit, Jeanne Meijer, attorney for Standard New York, the group’s US-based securities broker, said: "[Standard New York] … that does not engage in forex trading, and [which] did not employ any of the persons alleged by the commission to have represented it, is said to have been party to three manifestations of the alleged collusive arrangement. The nature of the representation is not revealed in the papers."
Sinton said: "Overall, the commission provides no particularity of when, where and how often [Standard Bank SA’s] alleged participation in collusive practices is said to have occurred, rendering it impossible [for the bank] to respond meaningfully."
Sinton’s affidavit supported those of BNP Paribas and JP Morgan, who also disputed that SA’s competition authorities had jurisdiction over them.
Investec was seeking an order directing the commission to provide "material facts" supporting its allegations, as required by tribunal rules.
Alternatively, Investec sought the evidence on which the commission relied. If the tribunal declined to grant such an order, Investec sought an order upholding its exception application and dismissing the commission’s referral, Krengel said.