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Investors Say They Have ‘Smoking Gun’ In Auction-Fixing Suit


August 5, 2021

Investors suing a group of Wall Street banks including Goldman Sachs and Credit Suisse for allegedly conspiring to manipulate the $14 trillion market for securities issued by the U.S. Treasury Department are fighting to keep their case alive after their initial complaint was dismissed in March.

On Wednesday, investors filed their omnibus opposition brief contesting the various dismissal briefs filed the same day by the large banks they’re suing. In it, they say their amended complaint includes the “proverbial smoking gun” in the form of direct evidence that U.S. District Judge Paul G. Gardephe said was missing in their initial complaint.

The amended complaint, which was submitted in May, relies heavily on testimony by a former senior executive of a UBS affiliate, where they describe how an “old boys club” consisting of primary dealers coordinated before an auction to get desirable results. The banks have argued that the complaint fails to sufficiently identify the executive, who is not named in the complaint.

“The Amended Complaint puts the witness at the scene of the crime: He had to buy and sell Treasuries for UBS’s own book, and his job responsibilities required him to communicate with UBS’s Treasury desk traders,” the investors said.

The suit against Bank of America, Barclays, BNP Paribas, Citigroup, Credit Suisse, Goldman Sachs, JPMorgan, Morgan Stanley, RBS and UBS was filed in 2015 after media reports of a U.S. Department of Justice investigation into possible manipulation of the Treasury market. It was consolidated into multidistrict litigation later that year.

The suit particularly accuses Goldman, JPMorgan, Barclays, Citigroup, Bank of America, Morgan Stanley and Credit Suisse of colluding with a trading platform called Tradeweb to block the emergence of new platforms where better prices could be obtained for Treasury securities traded after the auctions.
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The investors are represented by Quinn Emanuel Urquhart & Sullivan LLP, Cohen Milstein Sellers & Toll PLLC, and Labaton Sucharow LLP.

Read Investors Say They Have ‘Smoking Gun’ In Auction-Fixing Suit.