- Posted September 15, 2015
- Tweet This | Share on Facebook
Big banks close to $1.9B settlement for price-fixing
By Bernard Condon
AP Business Writer
NEW YORK (AP) - Twelve major banks have tentatively agreed to pay $1.87 billion to settle allegations that they colluded to fix prices and lock out competitors in the market for insurance-like products widely traded before the financial crisis, according to a lawyer for investors.
The deal, if finalized, would be one of the largest U.S. anti-trust settlements, said Daniel Brockett, a lawyer representing a Los Angeles pension fund among other plaintiffs. He said the final terms need to be hammered out, and a judge would still need to approve the deal.
Bank of America, JPMorgan Chase, Citigroup and other banks met secretly to kill proposals that would put the trading of these insurance-like products onto an exchange through which they could be bought and sold like stocks and their prices made more transparent, according to a complaint filed in U.S District Court in New York. In keeping trading private in a "rigged" market, the banks cheated investors out of billions of dollars, the complaint alleges.
"There was no central place to go for a stream of prices. You had to go to the banks and they controlled the business and they charged high prices," said Brockett, a partner at Quinn Emanuel Urquhart & Sullivan. An investor "basically had to pay what they wanted."
The banks have denied allegations of wrongdoing. They do not face criminal charges.
Emails and phone calls to lawyers representing several of the banks were not immediately returned. Spokespeople for Bank of America and Citigroup declined to comment.
Another defendant in the suit, the International Swaps and Derivatives Association, said in a statement that it is "pleased" that the case is close to resolution and that it is "committed to further developing CDS market structure to ensure the market functions safely and efficiently."
CDS stands for credit-default swap, a product bought by investors to protect themselves in case governments or companies default on their debts.
The settlement was first reported by Bloomberg News.
Credit default swaps figured prominently in the financial crisis, notably in the near-collapse of American International Group, a giant insurer that sold protection to investors in home mortgages but couldn't pay out on the policies when the housing market crashed. AIG eventually received $182 billion in a government bailout.
The case against the banks involves swaps they handled starting in the fall of 2008, at the start of financial crisis when Lehman Brothers collapsed, triggering the biggest global economic downturn since the 1930s.
The case is before U.S. District Judge Denise Cote.
Published: Tue, Sep 15, 2015
headlines Oakland County
- Associations gather for Spring Fling
- Supreme Court denies rehearing request by attorneys sanctioned for meritless election lawsuit
- Law school conducts ‘Know Your Rights Day’ for high school students
- Oakland County household hazardous waste dropoff events promote environmental stewardship and safeguard communities
- Nessel testifies in support of BRITE Act
headlines National
- Incarceration series includes female inmates but doesn’t tell full story
- ACLU and BigLaw firm use ‘Orange is the New Black’ in hashtag effort to promote NY jail reform
- Former DOJ official who alleged election fraud violated at least one ethics rule, ethics committee says
- Winston & Strawn will provide reduced-cost legal services for routine tasks under Winston Legal Solutions umbrella
- Should Justice Sotomayor retire? Chemerinsky, White House haven’t joined calls for her to step down
- Which BigLaw firms are increasing lateral associate hiring the most? One made legal headlines last year