By Christina Rexrode
Bank of America Corp. has agreed to pay $180 million to settle a
lawsuit by private investors who accused the bank and others of
manipulating foreign-exchange rates.
The bank's decision comes after rivals J.P. Morgan Chase &
Co. and UBS AG had agreed to settle with the same investors. Other
banks, including Citigroup Inc. and Barclays PLC, are expected to
settle soon, according to people familiar with the situation.
Regulators around the world have been examining whether banks
improperly manipulated the forex rates, and half a dozen banks
settled with U.S. and U.K. regulators in November. At the time,
Bank of America paid $250 million to the Office of the Comptroller
of the Currency, though its U.S. rivals Citigroup and J.P. Morgan
paid more than $1 billion each in fines to various regulators.
Other multinational banks are also expected to settle this year
with the Justice Department and the Federal Reserve, people
familiar with the situation have said.
Bank of America made its latest disclosure in a regulatory
filing Wednesday. It said that the cost of settling the lawsuit
would be covered by existing reserves.
The settlement announced Wednesday involves a lawsuit filed in
late 2013 by pension funds and other investors. The suit accused
traders at a dozen banks of improperly sharing confidential
information about their clients' orders via electronic chat rooms,
then using that information to make money at the expense of their
clients.
Connecticut-based law firm Scott + Scott, which is representing
investors, had announced an agreement in principle with Bank of
America earlier this month but didn't disclose an amount. The
settlements have been getting increasingly bigger. J.P. Morgan
earlier agreed to pay $99.5 million, and UBS agreed to pay $135
million. They, like Bank of America, also agreed to cooperate with
the law firms' investigations into other banks.
The lawsuit, which was filed by investors including the Oklahoma
firefighters pension fund and the city of Philadelphia pension
fund, represents only a portion of global banks' foreign-exchange
liabilities.
The other banks that were sued include BNP Paribas, Credit
Suisse, Deutsche Bank, Goldman Sachs Group Inc., HSBC Holdings PLC,
Morgan Stanley and Royal Bank of Scotland Group PLC.
Citigroup Inc. and Barclays PLC were expected to pay as much as
$800 million combined to settle its lawsuit with investors, The
Wall Street Journal reported last month. Settling with private
investors while negotiating with the Justice Department and
regulators may be a strategy by the banks to minimize the damage
from both, experts said at the time.
Write to Christina Rexrode at christina.rexrode@wsj.com
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