The FOREX case is not your standard securities class action case and requires a more hands-on approach. As in prior antitrust settlements – most recently, the credit default swaps (CDS) matter – the Claims Administrator will “construct” your eligible trades. Below are some frequently asked questions regarding the constructed trade approach.
HOW IS THIS PROCESS (CONSTRUCTED TRADES) DIFFERENT FROM THE STANDARD SECURITIES CLASS ACTION PROCESS?
- With the standard securities class action filing, the claims form is sent out to as many people as possible who may have eligibility. Those who feel they are eligible will fill all their trading details on the claim form and submit it to the administrator. The administrator will then accept or reject those claims and those accepted will get a pro-rata distribution of the settlement money.
- In the constructed trade approach, the money is put into escrow. Plaintiffs’ counsel then hires an expert to model or come up with a formula by which claimants and their losses will be measured. Next, the administrator will receive customers’ trade details from the settling defendants and pricing data from third party sources to try to construct eligible trades for you and every other class member. Once those eligible trades are determined, you, as an eligible claimant are sent a notice that contain unique login credentials that allow you to go to a secure portion of the administration’s space and see the trades they have constructed as eligible and determine if it is accurate.
WHERE DO THEY (ADMINISTRATORS) GET THE INFORMATION?
- The administrator will use information obtained from the settling defendants, the CME, ICE Futures U.S., and other third-party sources.
Read here to learn more.
WHAT INFORMATION ARE THEY (ADMINISTRATORS) LOOKING FOR?
- Total transaction volumes during the class period with all defendants – not just the settling defendants
- Type of instruments – the alleged wrongdoing had a greater impact on some instruments, like spot transactions, than on others such as FX options or future contracts. It also had less impact on liquid currency markets than on those thinly traded; and large trades were more impacted because defendants’ economic incentives for manipulation and collusion were greater. Therefore, the type of instrument and currency pairings involve need to be identified to apply the appropriate weights to the transaction volumes.
Learn more about eligibility here.
FOR MORE INFORMATION
- Case Spotlight: Partial settlement of $2B in Forex case involves complicated antitrust issues and FX trading
- FX Case Update (June 2017): Preliminary timeline and expected preliminary approval of settlement with five more defendants
- Whitepaper: Antitrust – The Evolving Fiduciary Landscape
- Whitepaper: 2016 Year In Review – Global, Antitrust and U.S. Securities Class Action
- FX Video: FX update – August 2016
- FX Video: FX update – September 2016
- FX FAQ: How do I know whether I’m eligible for recovery?
- FX FAQ: When is the claims administration process likely to begin?