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Report: Brazilian exporters seeking up to 70B reais in damages from forex cartel

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Report: Brazilian exporters seeking up to 70B reais in damages from forex cartel

A group of Brazilian exporters is seeking up to 70 billion Brazilian reais in damages from banks that allegedly colluded to manipulate foreign exchange rates between 2007 and 2013, O Estado de S.Paulo reported.

A group of banks has been under investigation by Brazilian antitrust regulator Cade for their alleged involvement in a cartel that used anti-competitive practices to fix prices. The group of exporters will reportedly file an injunction against the banks for alleged losses caused by what they say was an unfair exchange rate.

"Exporters received less reais to the dollar," said Roberto Giannetti da Fonseca, the vice president of Brazil's foreign trade association, the AEB.

The exact amount the exporters are seeking is still being calculated, the report noted, but the estimate is based on an annual sales average of $50 billion and assumes losses of 20 centavos per dollar exchanged, resulting in 10 billion reais of losses annually.

When Cade first launched its investigation in 2015, the watchdog said it found evidence suggesting the banks formed a "cartel to fix price levels (exchange spread); coordinate the purchase and sale of currencies and customer price proposals; and hinder and/or prevent the activities of other operators in the foreign exchange market involving the Brazilian currency."

A second investigation was launched in December 2016 when Cade said it found "strong indications of anti-competitive behavior" at Banco BBM SA, Banco BNP Paribas Brasil SA, Banco BTG Pactual SA, Banco Citibank SA and HSBC Bank Brasil SA - Banco Múltiplo.

Cade also found indications that Banco ABN AMRO SA, Banco Fibra SA, Banco Itaú BBA SA, Banco Santander (Brasil) SA and Banco Société Générale Brasil SA participated in the cartel, but possibly to a "lesser extent."

The regulator in December 2016 reached a settlement deal with Barclays Plc, Citicorp, Deutsche Bank SA – Banco Alemão, HSBC Holdings Plc and JPMorgan Chase & Co. to pay 183.5 million reais in fines for their alleged participation in the forex scheme.

As of April 4, US$1 was equivalent to 3.12 Brazilian reais.