DoJ asks for discovery stay in benchmark case until ‘Cartel’ case ends

US tries to balance need to protect ongoing criminal investigations and lawsuits with civil attorneys’ desire for additional testimonies

Five-month extension: if granted, the stay would make certain employees at seven banks off limits to civil attorneys

The US Department of Justice has asked a federal court judge for a five-month extension on the limited discovery stay in the foreign exchange benchmark rates antitrust litigation, until it closes an ongoing case against three former UK currency traders who were members of an electronic chatroom called ‘The Cartel’.

The June 5 request made by Jeffrey Martino, chief of the DoJ’s antitrust division in New York, is longer than the previous three-month extensions sought by the agency.

The criminal case against former traders Christopher Ashton, Rohan Ramchandani and Richard Usher is expected to begin on October 1 in New York, after they lost a motion to dismiss in May. They are accused of conspiracy to restrain trade in the EUR/USD spot market.

Martino told Southern District Court judge Lorna Schofield that while other indicted cases are relevant to the DoJ’s assessment of a stay, the agency believes it will be in a better position to narrow the scope of such requests after the conclusion of the criminal case against the three men.

“The Department submits the scope of the stay appropriately balances the need to protect the integrity of ongoing grand jury investigations and cases with plaintiffs’ desire for testimonial discovery at this juncture of the civil cases,” Martino wrote.

He said the plaintiffs in the benchmark antitrust case agree to the DoJ’s request, as well as all of the defendant banks in the case except for Credit Suisse, which has taken no position on the matter.

The Department submits the scope of the stay appropriately balances the need to protect the integrity of ongoing grand jury investigations and cases with plaintiffs’ desire for testimonial discovery at this juncture of the civil cases
Jeffrey Martino, US Department of Justice

If approved, an extension of the limited discovery stay will mean antitrust attorneys will not be able to depose or interview the current and former employees at seven defendant banks in their case. The only exceptions would be those who worked for any of the banks before the beginning of the class period of December 2007. The banks under the stay are Barclays, BNP Paribas, Citibank, HSBC, JP Morgan Chase, RBS and UBS.

Martino said the DoJ will consider one-off deposition requests for people who are covered by the terms of the stay.

UK depositions under way

Meanwhile, attorneys in the benchmark antitrust case have received the green light to depose two former currency traders in the UK. In recent weeks, prosecutors at Scott+Scott law firm have received so-called letters rogatory to seek testimony from Kevin Connors and Andre Katz, according to filings in the Southern District Court of New York.

Letters rogatory are formal requests made by a US court to a foreign court – in this case, the UK – seeking judicial assistance to get evidence from currency traders located in that country.

London-based Connors was global head of foreign exchange sales at Bank of America Merrill Lynch, where he was responsible for all aspects of the bank’s FX sales strategy and execution globally. He joined BAML in 2011 from Goldman Sachs, where he was global co-head of FX sales. 

In January 2011, FX Week reported that Connors had left Goldman Sachs as a result of compliance irregularities. A source familiar with the current matter in the UK told FX Week that Connors’ testimony in the antitrust case is not related to his tenure at BAML

Katz was a director of G10 spot FX for Europe, the Middle East and Africa at BAML between August 2005 and June 2013. Prior to that, he was a director at Deutsche Bank. He joined Commonwealth Bank of Australia in autumn 2013.

BAML declined FX Week’s request for comment. Similarly, attorneys at Scott+Scott have declined to discuss the recent developments on UK depositions and could not immediately be reached for a comment on the latest request made by the DoJ.

FX Week reported in March that preparations were being made to get testimonies from UK traders connected to banks that have already settled. Prosecutors in the case have declined to say how many people, and from which banks, will be called upon to give sworn testimonies.

The FX benchmark rates lawsuit alleges 16 global banks conspired to fix and manipulate prices in currency markets, in violation of both the Sherman Antitrust Act and the Commodity Exchange Act in the US. Although the banks have denied the merits of the claim, 15 have agreed to a combined settlement of more than $2.3 billion. Credit Suisse is the only bank yet to agree to a settlement.

The banks that have settled are BAML, The Bank of Tokyo-Mitsubishi UFJ, Barclays, BNP Paribas, Citi, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan, Morgan Stanley, RBC Capital Markets, RBS, Societe Generale, Standard Chartered Bank and UBS.

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