On February 21, 2019, Plaintiffs filed for class certification, and on April 10, 2019, Plaintiffs completed the bulk of fact discovery in this groundbreaking antitrust class action against 11 ‘dealer defendant’ banks, including Bank of America J.P. Morgan Chase & Co, Citigroup, Goldman Sachs, Credit Suisse and others in a lawsuit charging a number of the world’s largest investment banks with conspiring to engineer and maintain a collusive and anti-competitive stranglehold over the market for interest rate swaps (IRS) in violation of federal antitrust laws – an action that harms investors in one of the world’s biggest financial markets.

As of October 15, 2021, Plaintiffs’ are still awaiting class certification.

On August 3, 2016, Cohen Milstein Sellers & Toll PLLC was appointed co-lead counsel.

Case Background

The Chicago Public School Teachers’ Pension and Retirement Fund filed a lawsuit in federal court, represented by Cohen Milstein Sellers & Toll PLLC and Quinn Emanuel Urquhart & Sullivan, LLP, to seek an injunction to put an end to this anti-competitive arrangement, and damages to compensate them for the injuries they suffered.

The “Dealer Defendant” banks include Bank of America, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan, the Royal Bank of Scotland, and UBS.

Interest rate swaps, which are regularly used by a broad spectrum of investors, including pension funds, university endowment funds, hedge funds, and municipalities, allow an entity to swap its fixed interest-rate payments for the floating interest-rate payments of a benchmark, or vice-versa.  Given their daily use across the financial industry, interest rates swaps are a critical, multi-trillion dollar market which investors depend upon.

According to the complaint filed on November 25, 2015, in the U.S. District Court, Southern District of New York, interest rate swaps have been standardized and ripe for exchange trading for years.  Exchange trading brings transparent and competitive pricing and faster execution to a market, thus bringing significant benefits to investors.  For instance, when foreign exchange trading started to move to electronic trading platforms recently, the bid/offer spread for certain currency transactions declined by over 50 percent.

As alleged in the complaint, despite the market for interest rate swaps being economically ready for standardized exchange trading, investors remain stuck trading IRS in an inefficient and antiquated market dominated by the Dealer Defendants. By blocking the entry of exchanges into the IRS market, the Dealer Defendants Dealers force investors to trade with them in an opaque and inefficient over-the-counter market which allows the Dealer Defendants to extract billions of dollars in higher fees and costs, year after year, from the class members in this case.   The Dealer Defendants maintained this profit center by conspiring to squash every potential market entrant that threatened to bring competition and transparency to the buy-side in the IRS market.  Since at least 2007, as detailed in the complaint, the Dealer Defendants have jointly threatened, boycotted, coerced, and otherwise eliminated any entity or practice that had the potential to bring exchange trading to investors in the IRS market.

Ironically, the Dealer Defendants themselves trade IRS with each other on electronic, exchange-like platforms, but they bar investors from these platforms.   According to Carol V. Gilden, a Partner at Cohen Milstein, “These banks have used strong-arm tactics to stifle competition to the detriment of interest rate swaps investors, such as the Chicago Teachers Pension Fund.  It is time to stand up to these tactics and put a stop to them.”

Cohen Milstein is no stranger to protecting investors in the financial industry, having recovered well over a $1.5 billion for investors over the last few years in lawsuits against major banks for securities violations with respect to mortgage-backed securities.

July 28, 2017, U.S. District Judge Paul Engelmayer issued a ruling allowing a majority of the plaintiffs’ claims to proceed against 11 ‘dealer defendant’ banks.

The Cohen Milstein team is led by Carol Gilden, J. Douglas Richards and Michael Eisenkraft, of Cohen Milstein’s Chicago and New York offices.  Jacobs Burns Orlove & Hernandez is additional counsel.  For more information about Public School Teacher’ Pension and Retirement Fund of Chicago v. Bank of America Corporation, et al, please visit https://www.cohenmilstein.com/case-study/interest-rate-swaps-antitrust-litigation

The case name is: In re Interest Rate Swaps Antitrust Litigation, Case No. 1:16-md-02704, U.S. District Court, Southern District of New York.