28 banks now in the crosshairs over rand manipulation case

Written by Ciaran Ryan. Posted in Journalism

The case, first brought six years ago by the CompCom, argues there was an overarching conspiracy to manipulate the level of the rand. From Moneyweb.

Among the nine additional banks alleged to have participated are HSBC USA, FirstRand, Standard Americas, Credit Suisse USA, Merrill Lynch and Bank of America. Image: Mike Hutchings, Reuters
Among the nine additional banks alleged to have participated are HSBC USA, FirstRand, Standard Americas, Credit Suisse USA, Merrill Lynch and Bank of America. Image: Mike Hutchings, Reuters

The Competition Commission this week applied to the Competition Tribunal to expand to 28 the number of respondent banks alleged to have manipulated the rand through private Bloomberg messaging rooms going back to September 2007.

Previously, 19 banks were alleged to have participated in a conspiracy to manipulate the rand.

This week the commission asked the tribunal to add another nine banks to the list of alleged conspirators, who are accused of directly or indirectly fixing the US dollar-rand price by way of manipulating bids, offers, the bid-offer spread and the spot exchange rate.

“The participants to the conspiracy sought to benefit through their participation in the conspiracy by receiving assistance from competing traders to profit, reduce risk and to avoid making losses, when engaged in foreign exchange trading with the USD/ZAR currency pair,” says the commission’s court papers.


Traders from participating banks are alleged to have been in frequent and regular contact and communication with traders from other banks via Bloomberg chatrooms to co-ordinate their trading activities, provide each other with information and reach understandings on trading strategies.

Read:Rand-rigging investigator alleges widespread currency collusion [2015]

The dark and ‘smoke-filled’ chatroom that could sink rogue forex traders [2018]

FX-rigging case against 20 banks dealt setback [2019]

CompCom wants authority over non SA banks [2020]

The commission’s complaint before the tribunal says it does not know if the “overarching conspiracy” between the banks has ceased to operate.

The effect of the alleged conspiracy between 2007 and 2013 was an absence of random fluctuations and volatility in the forex market over time and across banks, the use of round figures for market quotes, and a consistent spread of between R0.05 and R0.1 charged by SA banks for the purchase of US dollars, with the exception of RMB.

The commission’s complaint accuses traders from individual banks of participating in a conspiracy.

Banks hit back

Legal teams from the banks chipped away at the commission’s case, arguing that it lacked jurisdiction and had not set out a strong enough case to proceed.

Mike van der Nest, representing JP Morgan, this week argued that the commission’s case rests on 158 chats involving 28 banks over a period of seven years, which does little to advance the argument that everyone in the industry knew what everyone else was doing.

“It’s quite something for the commission to launch a case against 28 respondents. The commission needs to explain the glue, and the facts that make up the glue,” he said.

Chris Loxton, legal representative for ANZ, argued that the case against ANZ was “so remote and weak, that we’re surprised we’re still in this process”.

“The commission has not identified those banks against which there is a solid, winnable case,” he said.

He cited the vagueness of claims against ANZ traders Jason Katz and Murat Tezel.

Loxton conceded that Katz was an enthusiastic participant in these chatrooms, but that there was no participation in these chatrooms alleged after 2012, which was before Katz joined ANZ as an employee.

The commission’s complaint against the traders was problematic for its lack of detail as to the chatroom alleged to have been used, and the day when the alleged conspiracy was supposed to have occurred. The commission claims that a conversation from one chatroom was copied and pasted to another, yet there is no single incident of this nature after 2012 involving Katz or Tezel.

“How is it that the commission arrives at its conclusion that the two individuals were complicit and that therefore ANZ was complicit?” asked Loxton. “The way they do it is by making allegations of conclusions, and not allegations of fact.”

‘Unknown individuals’ also involved

The commission also alleges there were other unknown individuals involved in the conspiracy, the vagueness of which undermines a previous ruling by the Competition Appeal Court for more particularity on the part of the commission’s complaint.

In 2018, many respondent banks filed exceptions or objections to the commission’s case. There was also argument that the tribunal lacked jurisdiction over certain of the respondents, and that the commission had failed to plead sufficient facts to sustain a cause of action. Many banks argued the joinder of the additional parties should not succeed.

In 2018, a majority of the parties sought the dismissal of the case against them in its entirety.

Tribunal order

In 2019, the tribunal ordered the commission to provide more particulars in its complaint and confine itself to its claims of a single overarching conspiracy.

The commission was also required to limit the relief sought against respondent banks without a presence in SA to a so-called declaratory order.

This week’s arguments

Arguing before the tribunal this week, both Loxton for ANZ and Arnold Subel, representing Standard Bank of SA (SBSA), pointed to factual inaccuracies in the commission’s referral affidavit that lays out its case against the banks.

Subel added that the commission’s case did not meet the minimum requirement as set out by the Competition Appeal Court ruling of 2019 as it lacked particularity, nor did it come close to establishing a contravention by SBSA.

In its heads of argument, the commission rebutted claims that it had not provided sufficient facts to support its case, and that it was not required to plead the consequence or effect of every instance of conduct between the implicated traders – as argued by the banks.

The full effects of the alleged conspiracy will be fully ventilated at trial, where the commission will argue that the prohibited conduct should be seen as a whole, rather than a series of isolated instances.

Earlier this week, Nedbank objected to its joinder to the proceedings, arguing that the commission did not validly initiate a complaint against it in 2015. The commission replied that there was no merit in this argument as there is precedent to allow for a party to be cited even after the lodgement of the initial complaint.

The banks the commission applied to join to the proceedings this week include HSBC USA, FirstRand, FirstRand Bank, Standard Americas, Credit Suisse USA, Merrill Lynch and Bank of America.

In most cases, the banks objected on the grounds that the commission lacked jurisdiction.

Ciaran Ryan

The Writer's Room is a curated by Ciaran Ryan, who has written on South African affairs for Sunday Times, Mail & Guardian, Financial Mail, Finweek, Noseweek, The Daily Telegraph, Forbes, USA Today, Acts Online and Lewrockwell.com, among others. In between he manages a gold mining operation in Ghana, and previously worked in Congo. Most of his time is spent in the lovely city of Joburg.