In an opinion last week, Judge Cote dismissed a proposed class action accusing JP Morgan of charging “secret” markups for foreign exchange transactions. The plaintiff, a Louisiana retirement fund referred to as “LAMPERS,” argued that JP Morgan breached the parties’ contract by charging an undisclosed “fee,” but Judge Cote found that exchange rates are not “fees”: “A fee is a ‘sum paid or charged for a service.’ Merriam-Webster (2013). An exchange rate is ‘the ratio for converting one country’s money into another country’s money.’ Black’s Law Dictionary (9th ed. 2009). These are two distinct concepts . . . .” She also rejected LAMPERS’ claim under the implied duty of good faith:

LAMPERS claims it had a reasonable expectation that the Bank would not misrepresent FX rates, but this contention misses the point on several grounds. The Bank did not misrepresent the rates for the FX transactions. It is conceded that the rates JPMorgan charged were accurately reflected on monthly account statements. LAMPERS identifies no foundation for its “reasonable expectation” that, in addition to reporting the charged exchange rate, JPMorgan would also reveal its mark-up on the Indirect FX transactions. In any event, because the spreads were evident from the AutoFX Confirmations and publicly available databases, there was nothing secret about the mark-ups . . . .

The suit was somewhat similar to a case against BNY Mellon pending before Judge Kaplan. Judge Kaplan denied BNY’s motion to dismiss earlier this year, however, because the terms of the agreement – including any agreement to provide pricing based on “best execution” practices – were unclear and because (unlike the JP Morgan case) there was no integration clause to limit what Judge Kaplan could consider to be part of the agreement.