In re Foreign Exchange Benchmark Rates Antitrust Litigation

Background

The Credit Suisse Defendants moved to exclude certain guilty pleas by banks alleged to have conspired with Credit Suisse. The court previously denied that request. The Defendants then moved for reconsideration, but only concerning the pleas that they called the “Cartel Guilty Pleas.”

A motion for reconsideration asks the court to revisit an earlier ruling. The court stated that such relief is available only if there has been a controlling change in the law, new evidence is available, or the earlier decision contains a clear error or would cause serious unfairness.

Arguments and Analysis

The Defendants argued that the court had overlooked a distinction between benchmark-rate fixing and spread fixing. They maintained that the guilty pleas focused on benchmark-rate manipulation, which they said was irrelevant to the alleged conspiracy in this case. They also argued that the two types of fixing involved different methods, including coordinated trading and refraining from trading while another conspirator had an open risk position.

The court rejected those arguments. It said it had not overlooked the contents of the guilty pleas. Although the pleas arguably focused on benchmark-rate fixing, the banks had pleaded guilty to entering and participating in a conspiracy to fix, stabilize, maintain, increase, or decrease currency prices and to rig bids and offers. The pleas described near-daily conversations, including coded conversations, in an exclusive electronic chat room known as “The Cartel” or “The Mafia.”

The court explained that the pleas involved agreements among some of the same alleged co-conspirators, in some of the same or similar chat rooms, to fix prices by agreeing not to compete. The fact that the alleged agreements were carried out through different conduct—such as coordinating trade timing rather than coordinating spread quotes—did not make the evidence irrelevant. At a minimum, the court found, the conduct described in the pleas was admissible and highly probative of opportunity, intent, and plan under Federal Rule of Evidence 404(b)(2), which permits certain evidence of other acts for purposes such as proving intent or plan rather than showing a person’s character.

The court also rejected the Defendants’ arguments under Federal Rule of Evidence 403, which allows exclusion when the danger of unfair prejudice substantially outweighs the evidence’s value. The court said jury instructions could address any risk that jurors would find Credit Suisse responsible merely because other banks had pleaded guilty. The court emphasized that the guilty-plea evidence was not offered to prove Credit Suisse’s participation. It further found that the evidence was probative of the existence of a distinct but similar price-fixing conspiracy allegedly conducted partly in the Cartel chat rooms.

The court noted that one guilty plea, by UBS, did not contain the same language as the other pleas. Because the Defendants grouped UBS’s plea with the other Cartel members’ pleas and did not separately argue that it should be excluded for that reason, the court treated it the same way as the other pleas.

Ruling

Judge Lorna G. Schofield ordered that the Defendants’ motion for reconsideration, Docket No. 1892, was DENIED. The order left in place the earlier ruling refusing to exclude the challenged guilty-plea evidence. It did not determine whether Credit Suisse was a member of the alleged conspiracy.