Sonterra Capital Master Fund Ltd., v. UBS AG, ___ F.3d ___, 2020 WL 1544478 (2d Cir., Apr., 1, 2020)
A group of investment funds brought action against collection of financial institutions, asserting claims under the Sherman Act, the Racketeer Influenced and Corrupt Organizations Act (RICO), and common law based on allegations that financial institutions conspired to manipulate the benchmark interest rates used to price financial derivatives in the Japanese Yen currency market.
Article III Standing
The District Court for the Southern District of New York dismissed for lack of standing. The Court of Appeals reversed finding that the investment funds plausibly pleaded that they suffered monetary loss in their derivative transactions as result of financial institutions’ alleged manipulation of benchmark interest rates, and thus asserted sufficient injury in fact for Article III standing.
The Court explained plaintiffs have alleged enough details about their derivative transactions to “affirmatively and plausibly suggest that [they have] standing to sue,” including identifying numerous instances when Plaintiffs entered into derivatives transactions at prices that were “artificial” due to Defendants’ price fixing and manipulation. These actions harmed Plaintiffs and favored Defendants who took the other side of these transactions.
Ed Note: Interestingly, the Second Circuit does not discuss its prior precedent and/or Supreme Court precedent setting forth the “directness” standards for finding standing for civil RICO actions. Hope all be and stay well during this difficult time.