Barclays has agreed to
pay $50 million to settle a lawsuit in a US court claiming that it used “last
look” functionality to disadvantage its clients.
Profit & Loss previously reported in November 2015 that Barclays
and Deutsche Bank were facing class action misconduct claims led by Axiom
Investment Management relating to their use of last look.
At the time, Barclays
had recently agreed to pay the New York Department of Financial Services $150
million and terminate the contract of its global head of electronic fixed
income, currencies and commodities (e-FICC), after admitting to “certain
internal control failings” with regards to its last look functionality.
Now, whilst not
admitting guilt, Barclays has paid $50 million and agreed to provide
information that the plaintiff believes will help its claims against other
banks in similar last look misconduct cases, in order to settle a class action
lawsuit filed in a court in the Southern District of New York.
According to the class
action complaint, Barclays’ use of last look when pricing into both its single
dealer platform, BARX, and multi-dealer platforms, breached its contract with
the plaintiff and class members, and additionally breached its contract of
“good faith and fair dealing”.
The court documents
state: “Plaintiff further alleges that by promoting its prices as “executable”
when they were not, Barclays has unfairly deceived Plaintiff and class members
and caused significant damages to Plaintiff and the class while unjustly
The documents further
reveal that on February 10, 2016, Barclays agreed a preliminary approved
settlement of $50 million, which the plaintiff says will assist it in pursuing
similar claims against other banks in FX for their use of last look.
“Based on information
known to date, Plaintiffs’ Counsel believe there is substantial overlap between
the Class in this Action and class members in similar actions against other
banks. Access to Barclays’ transaction data will also permit Plaintiff’s
experts to assess factual and legal class certification and damages issues that
may arise in similar actions against other banks,” notes the court document.
The Axiom-led class
action complaint filed against Deutsche Bank similarly claims that the German
bank delayed the execution of matches trades using last look when those trades
were unfavourable to its position or the bank could extract a larger profit if
it cancelled the trade.
“Throughout the Class
Period (defined herein), Deutsche Bank has used Last Look to reject millions of
trades that would have been otherwise executed but for Deutsche Bank reneging
on its matched orders. As a result, Deutsche Bank breached those contracts, as
well as breached the covenant of good faith and fair dealing. Alternatively, by
promoting its prices as “executable,” when they were not, Deutsche Bank has
unfairly deceived Plaintiff and the Class,” says the class action complaint.
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