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Morgan Stanley, Goldman Sachs, JP Morgan and UBS Agree to Pay Nearly Half a Billion Dollars to Settle Stock Lending Case

August 23, 2023


Joint Venture EquiLend to Implement Landmark Governance Reforms Aimed at Limiting Future Anticompetitive Misconduct

NEW YORK, NY – After six years of litigation, a class of investors led by the Iowa Public Employees’ Retirement System, the Los Angeles County Employees Retirement System, the Orange County Employees Retirement System, the Sonoma County Employees Retirement Association, and Torus Capital LLC reached a historic partial settlement with Morgan Stanley, Goldman Sachs, UBS, JP Morgan, and EquiLend in a case that alleged that these banks, along with Credit Suisse and Bank of America, engaged in a group boycott to thwart the modernization of the stock lending market in violation of the antitrust laws. 

The settlement with these defendants provides that they will pay approximately half a billion dollars in cash, adding to the $81 million settlement previously signed with Credit Suisse for a total of $580 million in cash payments to the class. While Defendants have denied any wrongdoing and that any reforms were necessary, Plaintiffs believe that the equitable relief they designed and negotiated for will help align EquiLend to the best practices and guidelines for anti-cartel and collaborations among competitors.  

These reforms include the mandatory rotation of outside antitrust counsel and EquiLend board members, limitations on who can access commercially sensitive information, and a robust compliance, training, and monitoring program at EquiLend.

“We’re very pleased to have partially settled this case and had such an impact on how EquiLend operates. We are looking forward to continuing to hold Bank of America accountable as the case progresses,” said Michael Eisenkraft, partner at Cohen Milstein Sellers & Toll PLLC.

In this antitrust class action, the plaintiffs alleged collusion among six of the world’s largest investment banks, including Bank of America, Morgan Stanley, Goldman Sachs, Credit Suisse, and their joint venture, EquiLend, to prevent the modernization of the antiquated, inefficient, and opaque over-the-counter stock loan market in order to preserve their market dominance and role as privileged intermediaries between borrowers and lenders of stock. 

Specifically, the plaintiffs alleged that when new entrants tried to modernize the stock loan market, the banks conspired to boycott them, shut them down, and eliminate them as threats. This harmed the class by trapping them in an antiquated market structure and forced them to pay supracompetitive “spreads” to the defendant banks for their role as intermediaries in the stock loan market.

The plaintiffs are represented by Co-Lead Counsel Cohen Milstein Sellers & Toll PLLC and Quinn Emanuel Urquhart & Sullivan, LLP.

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