Investors who have accused major banks of colluding to thwart modernization of the trillion-dollar stock loan market asked a New York federal judge Wednesday to greenlight a nearly $500 million settlement reached with JPMorgan, Morgan Stanley, Goldman Sachs and two other lending institutions.
The financial institutions, along with UBS and EquiLend, agreed to make a cash payment of $499 million and implement governance changes, like an antitrust code of conduct, for EquiLend — a joint securities lending platform started by the defendant banks, according to the motion for preliminary approval.
The defendants also agreed to cooperate in the investors' litigation against Bank of America, the only defendant remaining in the case, the motion states.
The nearly $500 million cash payment will be added to the $81 million that Credit Suisse agreed to pay last year to be the first bank to exit the proposed class action, the investors said. The Credit Suisse settlement received preliminary approval in February 2022.
"This is a significant sum and places this settlement among the larger antitrust settlements reached in the past decade," the investors said. "The new settlement agreement includes forward-looking measures that plaintiffs believe will further promote a competitive market for all stock-loan market participants."
"It is rare that private plaintiffs (as opposed to the [U.S. Department of Justice] or [Federal Trade Commission]) are able to achieve such reforms as part of the settlement of a purely civil lawsuit," they added.
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The investors' attorneys from Quinn Emanuel Urquhart & Sullivan LLP and Cohen Milstein Sellers & Toll PLLC applauded the "historic settlement" in a statement to Law360 on Wednesday evening.
"Together with the earlier settlement with Credit Suisse, we have now recovered $581 million from the settling banks," the attorneys said. "This is a significant sum and places the stock loan settlement among the larger antitrust settlements reached in the past decade."
"Of equal significance, the settlement includes significant forward-looking relief that the plaintiffs believe is designed to prevent collusion and market abuse in the stock loan industry in the future," they added. "We look forward to continuing to prosecute the case against the lone holdout bank, Bank of America."
The investor plaintiffs are represented by Quinn Emanuel Urquhart & Sullivan LLP and Cohen Milstein Sellers & Toll PLLC.
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