Bank Cartel Claims Europe (BCCE), a joint-venture of law firm Grantley Sinclair LLP and litigation finance firm Commercial Damages Claims Limited this week announced a $12 million funding round for its dedicated litigation finance fund, the Bank Cartel Claims Fund (BCCF). The fund provides institutional and individual investors the ability to access a portfolio of litigation-related assets through a single fund allocation.
BCCE has identified three recently decided EU antitrust cases that it believes are highly suitable for follow-on antitrust litigation: the European Government Bonds Case, the Sovereign, Supra-Sovereign & Agency Bonds Case, and the Foreign Exchange Case. In each of these cases, investment banks participated in a cartel through a group of traders. Cartel behavior between competitors is considered a serious form of anti-competitive behavior and tends to generate significant penalties. Fines totaling €1.47 billion ($1.73 billion) were imposed on the investment banks by the European Commission.
“Companies are liable for violations of antitrust law and victims are entitled to full compensation for the actual losses and lost profits that they have suffered,” BCCE director Kees Arnaud said. “In these three cases, for example, the pension and hedge funds that lost millions of dollars because of these illegal cartels can effectively claim their damages through actions before a national court. A national court cannot overrule the European Commission on the issue of liability, so in most cases, the only remaining question to be decided is the amount of the damages. This makes antitrust litigation very attractive for investors.”
Like any investment, lawsuits require an upfront investment in exchange for an uncertain payoff down the road, making them similar to stocks, bonds, or options. The difference is cases end up in a yes/no outcome, which is similar to an options scenario.
“Investments in litigation financing generally offer high yields,” said Frank Mulder, COO of litigation finance firm Commercial Damages Claims Limited. “The key to higher returns is selecting lawsuit investments with key characteristics that mark them as effective investments. And thanks to a variety of modern innovations in finance and the law, investors can access litigation markets in ways that were not possible even a decade ago.”
BCCE plans to use the capital to hire lawyers and economic experts to pursue the antitrust damages claims against the banks. Damages are expected to exceed $1 billion.