DBS, OCBC sued by US-based investment funds

Two US-based investment funds have filed a lawsuit in New York against dozens of banks, accusing them of conspiring to rig derivative prices incorporating Singapore interest rate benchmarks, a court filing shows.

The suit was filed by Greenwich, Connecticut-based FrontPoint Asian Event Driven Fund and New York-based Sonterra Capital Master Fund and traces back to the 2013 scandal in Singapore when the central bank found more than 100 traders in the city-state had tried to rig key borrowing and currency rates.

Among the banks being sued are Citigroup, Bank of America, JPMorgan Chase, RBS, UBS, ING, BNP Paribas, OCBC, Barclays, Credit Agricole, Credit Suisse, Standard Chartered, DBS, Mitsubishi UFJ, HSBC, Macquarie and Commerzbank.

A Citigroup spokesman said the suit "is without merit and we will defend ourselves vigorously".

Credit Suisse, DBS and OCBC Bank declined to comment.

The other banks did not immediately respond to requests for comment outside business hours.

In 2013, the Monetary Authority of Singapore (MAS) censured a record 20 banks, saying 133 traders had tried to manipulate rates, including the benchmark bank-to- bank Sibor (Singapore interbank offered rate), the Swap offer rate and derivatives.

It did not fine the banks involved, but instead directed 19 of them to set aside additional reserves for a year and to adopt measures to address deficiencies.

The MAS has since returned all of the around US$9 billion (S$12 billion) it took from the banks as penalties, saying they have acted to prevent a recurrence of attempts to rig rates.

The authorities in the United States and Europe have also been investigating rate manipulations, most notably Libor (London interbank offered rate), slapping fines of billions of dollars on banks, including Barclays, RBS and UBS.

FrontPoint said it engaged in transactions from within the US for Sibor-based derivatives at "artificial prices proximately caused by Defendants' unlawful manipulation and restraint of trade".

Sonterra said it engaged in US- based transactions for Sibor-based derivatives, including Singapore dollar foreign exchange forwards.

"As a consequence of Defend- ants' manipulative conduct, Sonterra was damaged when it was overcharged and/or underpaid in transactions for Singapore dollar foreign exchange forwards," the filing says.

The two investment companies seek compensation for "treble the damages" incurred.

REUTERS

A version of this article appeared in the print edition of The Sunday Times on July 03, 2016, with the headline 'DBS, OCBC sued by US-based investment funds'. Print Edition | Subscribe