Goldman Sachs Group Inc., JPMorgan Chase & Co. and four other investment banks are conspiring to control the more than $1 trillion market for lending stocks, according to a federal lawsuit.
The complaint by the Iowa Public Employees Retirement System and two other pension plans claims the banks are blocking a shift to all-electronic system for matching lenders and borrowers of shares, so they can continue to profit from each transaction. In a short sale, traders sell borrowed stock, anticipating the price will drop so they can profit by buying back the shares at a lower price.
“Major investment banks are conspiring to preserve their profits at the expense of everyday investors,” plaintiffs’ attorney Michael Eisenkraft of Washington-based Cohen Milstein Sellers & Toll said in a statement Thursday. The investors are seeking unspecified damages in the class-action antitrust case, which could be tripled under federal law.
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