Ten large banks defeat antitrust lawsuit in US over bond trades

By Jonathan Stempel

NEW YORK (Reuters) -A U.S. decide on Tuesday dismissed an antitrust lawsuit accusing 10 giant banks of conspiring to rig company bond costs on the expense of strange buyers, after the unique decide recused himself as a result of his spouse owned inventory in one of many banks.

Traders accused Financial institution of America, Barclays, Citigroup, Credit score Suisse, Deutsche Financial institution, Goldman Sachs, JPMorgan Chase, Morgan Stanley, NatWest and Wells Fargo of overcharging them by billions of {dollars} since 2006 on “odd-lot” trades.

Such trades contain fewer than 1,000 bonds or are value lower than $1 million, and comprise most company bond trades. Traders mentioned the banks illegally charged spreads 25% to 300% greater than on bigger “round-lot” trades, inflating income.

U.S. District Decide Valerie Caproni in Manhattan mentioned the buyers didn’t show the banks conspired to function the Bond Desk, Buying and selling Edge and Commerce Internet platforms as a “catch-and-kill” operation to thwart honest costs, whereas boycotting rival platforms that promoted honest costs.

Although the banks managed an estimated 65% of U.S. underwriting and 90% of U.S. buying and selling quantity in company bonds, “it doesn’t comply with that defendants have the facility to regulate pricing of the bonds within the secondary market,” Caproni mentioned.

The decide additionally discovered no overt acts by the banks to advance the alleged conspiracy within the 4 years earlier than the lawsuit was filed in April 2020, dooming the Sherman Act case.

Legal professionals for the buyers didn’t instantly reply to requests for remark. Caproni’s dismissal is with prejudice, that means the case can’t be introduced once more.

The case was initially dismissed by U.S. District Decide Lewis Liman in October 2021.

4 months later, Liman’s clerk disclosed that the decide’s spouse owned Financial institution of America inventory whereas the case was pending, but it surely did not have an effect on the decide’s determination making.

In July 2024, the federal appeals court docket in Manhattan revived the case, saying Liman’s battle was “virtually definitely” unknowing however might name his impartiality into query.

Liman was not accused of wrongdoing.

The case is Litovich v Financial institution of America Corp et al, U.S. District Court docket, Southern District of New York, No. 20-03154.

(Reporting by Jonathan Stempel in New York; Modifying by Leslie Adler)