In yet another example of big banks agreeing to settle allegations of wrongdoing, three large institutions will pay investors $95.5 million to end litigation related to Supranational, Sovereign, and Agency Bonds.
In the agreed upon settlement… Deutsche Bank will pay $48.5 million, HSBC will pay $30 million, and Bank of America will pay $17 million. The three settling defendants deny any wrongdoing. It is important to note – at this time there are a number of other non-settling defendants. If and when these additional big banks agree to a settlement, the $95.5 million total is expected to grow significantly.
The lawsuit alleges that the defendants engaged in anticompetitive acts that affected the market for SSA Bonds in violation of Section 1 of the Sherman Act, 15 U.S.C. §1. Specifically, allegations relate to a brazen conspiracy to manipulate the market. Rather than the defendants competing with each other for the purchase and sale of SSA bonds to investors, the defendants worked as one team. This includes sharing sensitive pricing information, their customers’ trading histories and requests for quotes, their positions and trading strategies, and inside information about the pricing and demand for new issues of SSA bonds.
Plaintiffs argued… 1) the above noted behavior is the exact opposite of what competition is supposed to look like; and 2) by undermining competition across the SSA market through an illegal scheme, defendants reaped bountiful profits for nearly a decade at the expense of investors.
A Federal judge in the Southern District of New York will have a hearing in early 2021 to decide whether to approve the $95.5 million settlement. Investors were led by co-lead counsel Quinn Emanuel Urquhart & Sullivan and Robbins Geller Rudman & Dowd. Eligible investors will have until April 16, 2021 to submit claims with the court appointed claims administrator, Angeion Group.
The below table depicts a number of antitrust settlements that have resulted in large investor recoveries.
|CASE NAME||# OF DEFENDANTS||YEAR||SETTLEMENT AMOUNT|
|Foreign Exchange Benchmark Rates||15||2018||$2,310,275,000|
|Credit Default Swaps||12||2016||$1,864,650,000|
|LIBOR-Based Financial Instruments||4||2018||$590,000,000|
|Euro Interbank Offered Rate||5||2018||$491,500,000|
|LIBOR-Based Financial Instruments (U.S. Dollar & Eurodollar)||7||2020||$110,375,000|
|FX Instruments (Canada)||13||2017||CAD $108,547,206|
|Mexican Government Bonds||2||2021||$20,700,000*|
*Awaiting final court approval (and other defendants to settle) – likely in early 2021
By Jeff Lubitz, Executive Director, ISS Securities Class Action Services