July 31, 2017

U.S. District Judge Paul Engelmayer of the Southern District of New York will allow to go forward a suit claiming a dozen of the biggest banks colluded against competition in the $230 trillion interest rate swap market.

The order, issued late last week, represented a partial victory for plaintiffs seeking class status in the consolidated suit In re: Interest Rate Swaps Antitrust Litigation, 16-md-02704, against major financial firms such as Bank of America, JPMorgan Chase & Co. and Citibank. The defendants filed a motion to dismiss antitrust claims, arguing among other things that the plaintiffs, which include institutional investors as well as third-party trading companies, failed to meet the antitrust collusion requirements.

Plaintiffs allege that major financial institution "sellers" have systematically worked to corner the interest rate swap market by impeding and, later, actively sabotaging efforts to create trading platforms that allow "buyers" greater access to options.

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Cohen Milstein Sellers & Toll partner Michael Eisenkraft, part of the team representing plaintiff Public School Teachers' Pension & Retirement Fund of Chicago, said despite the judge's decision not to preserve the full complaint against the banks "we have a major case that's live."

"What we have now is a judge saying that our theory that the world's biggest banks conspired to artificially restrict the development of a major financial market for a four-year period going onward—it's a major victory," he said, even as plaintiffs say they continue to be harmed by the ongoing actions of the banks.

"It's not like they stopped conspiring and the market turned into what it should be overnight," he said.

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