Lawsuit claims 10 world’s largest banks rigged market for US corporate bonds

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Lawsuit claims 10 world's largest banks rigged market for US corporate bonds
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Ten of the world’s largest banks, together with JPMorgan Chase and Financial institution of America, have been sued for allegedly conspiring over practically 14 years to rig costs within the $9.6 trillion U.S. company bond market, costing unusual traders billions of {dollars}.

The proposed class motion filed on Tuesday in federal courtroom in Manhattan mentioned the banks have since August 2006 violated antitrust regulation by overcharging traders on “odd-lot” trades, that are price lower than $1 million and comprise 90% of all company bond buying and selling.

Different defendants embody Barclays, Citigroup, Credit score Suisse, Deutsche Financial institution, Goldman Sachs, Morgan Stanley, Royal Financial institution of Scotland and Wells Fargo & Co, or their respective associates.

Based on the 81-page criticism, the banks leveraged their energy from dealing with greater than two-thirds of U.S. company bond underwriting to quietly inflate spreads between the costs the place they’d purchase and promote odd-lot bonds.

This allegedly resulted in spreads 25% to 300% increased than on “round-lot” trades over $1 million, that are usually performed by institutional traders, enabling the banks to reap increased compensation whereas boosting retail traders’ buying and selling prices.

“No cheap financial justification explains the magnitude of the pricing disparity,” the criticism mentioned. It added that odd-lot spreads are narrower even in overseas bond markets with decrease volumes and liquidity.

Financial institution of America, Barclays, Citigroup, Credit score Suisse, Deutsche Financial institution, Goldman Sachs and Wells Fargo declined to remark. Representatives of the opposite banks didn’t instantly reply to requests for remark.

The traders are led by Isabel Litovich, a San Juan, Puerto Rico, resident who mentioned the collusion resulted in overcharges on odd-lot bond trades by her Morgan Stanley account. Legal professionals for the plaintiff didn’t instantly reply to requests for remark.

The Manhattan courtroom has been residence to dozens of personal lawsuits accusing banks of conspiring to maneuver numerous bond, commodity and foreign money markets. Earlier settlements in a few of these circumstances have resulted in billions of {dollars} in recoveries. The case is Litovich v Financial institution of America Corp et al, U.S. District Courtroom, Southern District of New York, No. 20-03154.

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