When we last posted about In re. Commodity Exchange Inc. Gold Futures and Options Trading Litigation, the parties were embroiled in a dispute concerning the data underlying the detailed statistical analysis contained in Plaintiff’s complaint. Defendants had sought production of all analyses prepared by Plaintiffs’ experts, whether or not they were cited or relied on in the complaint; Plaintiffs objected on the grounds of work-product privilege. Defendants’ motion to compel production was granted, and Plaintiffs sought a stay of enforcement of the discovery order pending the outcome of a writ of mandamus Plaintiffs filed with the Second Circuit.
We’ve since learned that Plaintiffs’ mandamus petition was denied, and discovery moved forward. After the failed mandamus petition, in October 2020, the counsel for HSBC notified the court of a settlement in principle between Plaintiffs and the HSBC Bank defendants, and a motion for preliminary approval of the settlement was filed in December. The briefing indicated that the settlement was to provide for $42,000,000 in monetary relief, together with HSBC’s provision to Plaintiffs of transaction data and other discovery necessary for both efficient distribution of the settlement funds, and in the prosecution of the action against the non-settling defendants. Like the earlier Deutsche Bank settlement (preliminarily approved in 2016), the settlement class was described as follows:
All persons or entities who during the period from January 1, 2004 through June 30, 2013, either (A) sold any physical gold or financial or derivative instrument in which gold is the underlying reference asset, including, but not limited to, those who sold (i) gold bullion, gold bullion coins, gold bars, gold ingots or any form of physical gold, (ii) gold futures contracts in transactions conducted in whole or in part on COMEX or any other exchange operated in the United States, (iii) shares in gold exchange-traded funds (“ETFs”), (iv) gold call options in transactions conducted over-the-counter or in whole or in part on COMEX or any other exchange operated in the United States; (v) gold spot, gold forwards or gold swaps over-the-counter; or (B) bought gold put options in transactions conducted over-the-counter or in whole or in part on COMEX or on any other exchange operated in the United States.
Orders preliminarily approving the HSBC settlement, providing for notice to the settlement class, and preliminarily approving allocation were issued in February 2021, and a motion for final approval of both the HSBC settlement and the earlier Deutsche Bank settlement was filed in July.
After several postponements of the fairness hearing, and following a revision to the plan of allocation to accommodate certain Objectors, the Court directed that Plaintiffs file a memorandum of law to address the question of whether “Plaintiffs are required to notify the putative class of the proposed revisions to the Plan of Allocation and to give putative class members an additional period of time to object so that the Court may consider any objections from class members in determining whether the revised Plan of Allocation is fair and reasonable.”
In due course, Plaintiffs their memorandum, in which they expressed their belief that the Court did have discretion to alter the Plan of allocation without a further notice and objection procedure, but still “agreed to follow the Court’s inclination to provide a second notice on the unique facts here.” The “unique circumstances” concerned the simultaneous filing of a motion for preliminary approval of a third settlement agreement, this one covering claims against Defendants Barclays Bank PLC, The Bank of Nova Scotia, Société Générale, and The London Gold Market Fixing Limited. Given that a new notice procedure would be required for the third settlement agreement, Plaintiffs requested that the fairness hearing be permitted to move forward with respect to all portions of the Deutsche Bank and HSBC settlement agreements, except for the portion concerning the Plan of Allocation; they further requested that notice of the revised Plan be given at the same time as the notices concerning the third settlement agreement.
The Court responded by scheduling the fairness hearing for January 4, 2022, and directing that Plaintiffs and all Defendants be present to discuss not only the Deutsche Bank and HSBC settlements, but the newly-filed motion for preliminary approval of the Third Settlement as well. Following that hearing—a transcript for which is not yet publicly available—the Court issued a series of orders concerning the Deutsche Bank and HSBC settlements: (1) an order providing notice of a revised Plan of Allocation; (2) an order awarding attorneys’ fees in the amount of $28,200,000, plus interest, out of the combined settlement fund of $102,000,000; and, finally, (3) an order awarding litigation expenses in the amount of $8,027,282.81, plus interest. In approving the attorneys’ fees and litigation expenses, the Court stated that it considered the compensation sought to be “fair and reasonable,” and, further, that the amounts had garnered no objections from class members. The Court further issued orders preliminarily approving the Third Settlement in the amount of $50,000,000, providing notice to the settlement class, and preliminarily approving the plan of allocation.
A fairness hearing for the Third Settlement Agreement is scheduled for August 5, 2022. Together with the settlements achieved with Deutsche Bank and HSBC (which were valued at $60,000,000 and $42,000,000, respectively), this third and final settlement represents a total of $152,000,000 for Plaintiffs.
This post was written by Alexandra M.C. Douglas.