February 11, 2022

Institutional investors leading sprawling multidistrict litigation against nearly a dozen megabanks that allegedly colluded to control the interest rate swaps market told a New York federal judge Friday they've reached a $25 million "icebreaker" settlement with Credit Suisse.

Along with the $25 million cash award, the proposed settlement calls for Credit Suisse Group AG to cooperate with the litigation against the remaining defendant banks, including providing up to four trial witnesses, according to the motion for preliminary approval.

Taxes, attorney fees, service awards and expenses will be taken out of the fund before it is distributed, the motion states. In exchange, the investors said they will release all claims against Credit Suisse.

The investors said they also agreed to reduce the amount of any aggregate monetary final judgment against the remaining defendants — including JPMorgan Chase & Co., Bank of America, Royal Bank of Scotland Group PLC, Goldman Sachs Group Inc. and Deutsche Bank AG — by a little more than 6%.

. . .

In the instant motion for the $25 million settlement Friday, the Public School Teachers' Pension and Retirement Fund of Chicago; the Los Angeles County Employees Retirement Association; the Genesee County Employees' Retirement System; and the Baltimore City Council said they reached the agreement in January after "extensive negotiations."

The investors requested a two-step preliminary approval process, proposing to file a separate motion for preliminary approval of the plans for providing notice and for allocating the settlement funds. The investors said that motion wouldn't be filed until they and Credit Suisse put together a proposed plan of distribution.

"It would be potentially wasteful to undertake such efforts without some indication that the core settlement terms are likely to move forward," the investors said. "Deferring notice can also potentially reduce the number of notices sent to class members in the event further settlements are reached or the action reaches a merits conclusion."

The settlement class includes anyone who, directly or through an agent, entered into at least one U.S. interest rate swaps transaction with any defendants from Jan. 1, 2008, through Jan. 21, 2022, according to the motion.

The investors said the deal should get the initial green light because it is substantively fair, particularly given the complexity and expense of continuing the already 6-year-old litigation.

. . .

The investors, whose cases were consolidated in 2016, claim the banks conspired to block startup trading platforms from entering the market.

The alleged conspiracy let the banks maintain an antiquated market structure that kept their profits high at the expense of investors on the buy side of swaps trades, who were prevented from using newer, anonymous trading platforms that provided more competition, more transparency and tighter spreads between buy prices and sell prices, according to the claims.

Back in 2019, the investors sought to certify a class of investors — a bid that was opposed by the banks — but while the parties briefed the issue, U.S. District Judge Paul A. Engelmayer recused himself, and the case was transferred to U.S. District Judge J. Paul Oetken.

The investors are represented by Cohen Milstein Sellers & Toll PLLC, Quinn Emanuel Urquhart & Sullivan LLP, Susman Godfrey LLP, Jacobs Burns Orlove & Hernandez and Labaton Sucharow LLP.

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