Reuters: Big Banks in $1.865 Billion Swaps Price-Fixing Settlement

The following is an excellent article written by Jonathan Stempel on September 11, 2015 on the Reuters website titled “Big Banks in $1.865 Billion Swaps Price-Fixing Settlement” and I quote:

Business News | Fri Sep 11, 2015 3:07pm EDT

“Big banks in $1.865 billion swaps price-fixing settlement”

Twelve major banks have reached a $1.865 billion settlement to resolve investor claims that they conspired to fix prices and limit competition in the market for credit default swaps, a lawyer for the investors said on Friday.

The settlement in principle was disclosed at a hearing before U.S. District Judge Denise Cote in Manhattan.

“We think it’s historic,” Daniel Brockett, the investors’ lawyer, said in an interview. “It’s one of the largest antitrust class-action settlements, and an extraordinary result for the class.”

The defendants include Bank of America Corp (BAC.N), Barclays Plc (BARC.L), BNP Paribas SA (BNPP.PA), Citigroup Inc (C.N), Credit Suisse Group AG (CSGN.VX), Deutsche Bank AG (DBKGn.DE), Goldman Sachs Group Inc (GS.N), HSBC Holdings Plc (HSBA.L), JPMorgan Chase & Co (JPM.N), Morgan Stanley (MS.N), Royal Bank of Scotland Group Plc (RBS.L) and UBS AG (UBSG.VX).

Other defendants are the International Swaps and Derivatives Association (ISDA) and Markit Ltd (MRKT.O), which provides credit derivative pricing services.

Credit default swaps are contracts that let investors buy protection to hedge against the risk that corporate or sovereign debt issuers will not meet their payment obligations.

The market peaked at $58 trillion in 2007, according to the Bank for International Settlements, but shrank to $16 trillion seven years later as investors better understood its risks.

American International Group Inc’s (AIG.N) CDS exposure was a major factor behind the 2008 federal bailout of that insurer.

In the lawsuit, investors including the Los Angeles County Employees Retirement Association and Salix Capital US Inc claimed that the defendants’ activity caused them to pay unfair prices on CDS trades from late 2008 through the end of 2013, even though improved liquidity should have driven costs down.

They also said the banks tried in late 2008 to thwart the launch of a credit derivatives exchange being developed by CME Group Inc (CME.O) by agreeing not to use new CDS platforms and pushing ISDA and Markit not to provide licenses to the exchange.

An ISDA spokeswoman said the group is “pleased the matter is close to resolution” and committed to helping ensure the safe and efficient functioning of the CDS market.

Representatives for the other defendants declined to comment.

U.S. and European regulators have also examined potential anti-competitive practices in the CDS market.

Investors’ lawyer Brockett, a partner at Quinn Emanuel Urquhart & Sullivan, said Cote gave both sides two weeks to iron out details before submitting a settlement for her preliminary approval.

Quinn Emanuel and Pearson, Simon & Warshaw are co-lead counsel for the plaintiffs.

The case is In re: Credit Default Swaps Antitrust Litigation, U.S. District Court, Southern District of New York, No. 13-md-02476.

(Reporting by Jonathan Stempel in New York; Additional reporting by Joseph Ax; Editing by Christian Plumb, Alan Crosby and Jonathan Oatis)”

(Great story. Sen Bernie Sanders knows there’s a problem and even Donald Trump says the hedge funds are getting away with murder. The question is–which of these many candidates running in the presidential primaries are REALLY GOING TO PUT A STOP TO THIS AND START JAILING SOME PEOPLE?

LaVern Isely, Progressive, Overtaxed, Independent Middle Class Taxpayer and Public Citizen Member and USAF Veteran

Advertisements

About tim074

I'm a retired dairy farmer that was a member of the National Farmer's Organization (NFO). Before going farming, I spent 4 years in the United States Air Force where I saved up enough money to get my down payment to go farming. I also enjoy writing and reading biographies and I write about myself as well as articles and excerpts I find interesting. I'm specifically interested in finances, particularly in the banking industry because if it wasn't for help from my local Community Bank, I never could have started farming which I was successful at. So, I'm real interested in the Small Business Administration and I know they are the ones creating jobs. I have been a member of Common Cause and am now a member of Public Citizen as well as AARP. I have, in the past, written over 150 articles on the Obama Blog (my.barackobama.com) and I'd like to tie these two sites together. I'm also on Twitter, MySpace and Facebook and find these outlets terrifically interesting particularly what many of these people did concerning the uprising in the Arab world. I believe this is a smaller world than we think it is and my goal is to try to bring people together to live in peace because management needs labor like labor needs management. Up to now, that hasn't been so easy to find.
This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: