Mike Lange, Securities Litigation Counsel, Financial Recovery Technologies

The deadline for filing claims in the $2.3 billion FOREX settlement was just extended (from March 22 to May 16, 2018 – read our blog). Ultimately, the size and complexity of the required data, which is being sourced from multiple entities, has been greater than the court and claims administrator initially anticipated.

Because of its size and complexity, even with the revised deadline, many firms are still scrambling to decide whether and how to submit. Some may simply opt for the administrator’s estimate of their losses (i.e. Option 1). This could prove a costly choice.

Under the settlement, claimants have two filing options:

• Option 1: accept the administrator’s estimate of their eligible trades and losses; or
• Option 2: submit their trade data for a more accurate determination of eligible trades and losses.

While Option 1 is easy, there are numerous reasons why the administrator’s estimates could significantly understate true losses and claim value. Below are a few we’d like to highlight:

1. INVESTORS HAVE NOT RECEIVED NOTICES FOR ELIGIBLE FUNDS

Many FRT clients have received dozens, hundreds and in some cases thousands of notices and claim forms. Yet some have not received them for funds they know to be eligible. Without the unique login credentials contained in the notices, they cannot access the administration site to elect Option 1. Clients may not have received notices because, as detailed below, the administrator may not have sent them or if it did, they may have been mis-delivered or failed to reach the right persons at their organization.

2. EVEN WITH A NOTICE/CLAIM FORM, OPTION 1 MAY UNDERSTATE ELIGIBLE LOSSES

Eligible losses will be based on trade volumes and under Option 1 the administrator will determine volumes using customer records provided by the settling defendants. Those records have known gaps, particularly in earlier years, requiring the administrator to extrapolate volumes for those time periods which may differ from your actual volumes.

3. THE SETTLING DEFENDANT’S RECORDS MAY NOT REFLECT YOU

If the settling defendants’ records don’t connect you and your trades, the administrator won’t include them when calculating your eligible trade volumes, or will heavily discount them if it’s not clear the trades were with a settling defendant. For example, this will happen if you:

• Traded with Credit Suisse, the lone non-settling defendant, whose records will not be available to the administrator;
• Transacted in exchange traded instruments which will not be available to the administrator;
• Traded through a third party, like a prime broker or investment/asset manager, as the settling defendants’ records will reflect their names, not yours; or
• Traded using electronic communications networks (ECNs), as these won’t always identify whether your counter-party was a settling defendant.

4. OTHER REASONS

Given the enormous volume of trade data, errors can occur in even the best administration. We’ve seen other cases where claim forms were sent to the wrong entities or addresses. Some claimants may be mis-identified as domiciled outside the US. This is important as non-US domiciled claimants must show an additional ‘nexus’ or connection between their trades and the US in order to be included; so erroneous domicile determinations can result in eligible trades not being counted by the administrator.

CONCLUSION

With the deadline quickly approaching, it’s essential to identify all accounts you think might have eligibility, identify any for which you don’t have notices and log-in credentials, and ensure that you are in a position to elect Option 1 before the deadline. In addition, pulling your data will not only assure that all accounts that need an Option 2 filing will have the most cohesive filing possible, but also provide clients who file Option 1 a way to cross-reference, analyze and potentially challenge the Claims Assessment Notification to ensure they receive the largest possible recovery.

Learn More

If you are uncertain whether or not you should file Option 1 or Option 2, we can help. Please reach out to your account manager or email us at learnmore@frtservices.com.

• FX Case Update (March 2018): Three Reasons Why You Shouldn’t Delay in Your Preparation
• FX Case Update (February 2018): The FOREX Antitrust Deadline Is Approaching – Are You Confident You Have Received All Your Claim Notices?
• FX Case Update (December 2017): The FOREX Administration – A View from the Trenches
• FX Case Update (October 2017): Online Claims Portal Is Now Open
• FX Case Update (September 2017): Deutsche Bank Reaches Settlement in the Forex Case > $190 million
• FX Case Update (August 2017): Five Additional Defendants Settle Bringing the Settlement Pool to Over $2 Billion
• FX Case Update (June 2017): Preliminary timeline and expected preliminary approval of settlement with five more defendants
• Sep 29: Deutsche Bank Reaches Settlement in the Forex Case > $190 million
• Whitepaper: Antitrust – The Evolving Fiduciary Landscape
• Whitepaper: 2016 Year In Review – Global, Antitrust and U.S. Securities Class Action 
• FX FAQ: How do I know whether I’m eligible for recovery?
• FX FAQ: When is the claims administration process likely to begin?

About FRT

U.S. CLAIMS  I  GLOBAL GROUP LITIGATION  I  ANTITRUST  I  LITIGATION MONITORING  I  BUYOUTS

Founded in 2008, Financial Recovery Technologies (FRT) is the leading technology-based services firm that helps the investment community identify eligibility, file claims and collect funds made available in securities and other class action settlements. Offering the most comprehensive range of claim filing and monitoring services available, we provide best-in-class eligibility analysis, disbursement auditing and client reporting, and deliver the highest level of accuracy, accountability and transparency available. For more information, go to www.frtservices.com.

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This communication and the content found by following any link herein are being provided to you by Financial Recovery Technologies (FRT) for informational purposes only and does not constitute advice. All material presented herein is believed to be reliable but FRT makes no representation or warranty with respect to this communication or such content and expressly disclaims any implied warranty under law. Opinions expressed in this communication may change without prior notice. Firms should always seek legal and financial advice specific to their unique situation and objectives.