March 08, 2019

The institutional investors leading a sprawling multidistrict litigation against 11 megabanks that allegedly colluded to control the interest rate swaps market asked a New York federal judge on Thursday to certify a class of investors who did swaps deals with the banks over the last six years.

The certification bid, which requests the appointment of Quinn Emanuel Urquhart & Sullivan LLP and Cohen Milstein Sellers & Toll PLLC as class counsel, says evidence obtained during discovery thus far firmly supports allegations that the banks conspired to block startup trading platforms from entering the market.

The 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 bid.

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The Public School Teachers’ Pension and Retirement Fund of Chicago and the Los Angeles County Employees Retirement Association want to certify a class of all individuals or entities that, between 2013 and now, entered into a fixed-floating interest rate swap, overnight index swap, single-currency basis swap or forward rate agreement with the 11 largest interest rate swaps dealers, including Goldman Sachs Group Inc. and Bank of America Corp.

According to the investors, the megabanks were long protected from competition through an “over-the-counter” trading market in which investors were consigned to buying and selling swaps directly with the banks, but that structure began to fracture with the advent of all-to-all anonymous trading platforms, which connected parties anonymously and matched their buy prices and sell prices “efficiently and transparently.”

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The case is In re Interest Rate Swaps Antitrust Litigation, case number 1:16-cv-02704, in the U.S. District Court for the Southern District of New York.

The complete article can be accessed here.