Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Seven banks agree to pay $324M to settle ISDAfix manipulation conspiracy suit, (May 4, 2016)

By Linda O’Brien, J.D., LL.M.

In a class action by institutional investors against domestic and foreign banks and an inter-dealer broker for an alleged conspiracy to manipulate ISDAfix—a benchmark interest rate incorporated into a broad range of financial derivatives, seven bank defendants have agreed to pay $324 million to settle the litigation, according to a motion for preliminary approval of the settlement filed in the federal district court of New York City (Alaska Electrical Pension Fund v. Bank of America Corporation, May 3, 2016).

Several institutional investors filed suit against the banks and inter-dealer broker ICAP Capital Markets LLC, alleging that the defendants used their respective roles in the rate-setting process to manipulate ISDAfix for financial gain. Specifically, investors claimed that the banks manipulated daily ISDAfix rates to benefit their own trading positions and ICAP assisted in the manipulation in order to earn brokerage commissions. In March 2016, the court denied the banks’ motion to dismiss the Sherman Act claim for lack of standing.

The plaintiffs are seeking preliminary approval of proposed settlements under which the defendants Bank of America Corporation, Barclays Bank PLC, Citigroup, Inc., Credit Suisse AG, Deutsche Bank, AG, JPMorgan Chase & Co., and The Royal Bank of Scotland Group PLC have agreed to provide for a total of $324 million in monetary relief as well as provide confirmatory discovery in the prosecution of the action against the non-settling defendants.

According to the plaintiffs’ memorandum in support of their motion, the proposed settlements were the product of arm’s-length negotiations conducted by experienced counsel knowledgeable in complex class litigation. The settlements fall within the range of preliminary approval in light of: (1) the complexity, expense, and likely duration of the litigation; (2) class counsel’s engagement in sufficient investigation to make an intelligent appraisal of the settlements; (3) the risks of establishing liability and damages; (4) the ability of the settling defendants to withstand a greater judgment; and (5) the likelihood of obtaining recovery at trial.

The proposed settlements satisfy the requirements under Federal Rule of Civil Procedure 23 for preliminary approval. The proposed class is sufficiently numerous that joinder of all members is impracticable and there are questions of law or fact common to the class. The claims or defenses of the class representatives are typical of the claims or defenses of the class and the class representatives do not have antagonistic interests to that of the class and have retained qualified, experienced counsel.

Additionally, there are questions of law or fact common to class members that predominate over any questions affecting only individual class members and a class action is superior to other available methods for the adjudication of the controversy.

Finally, the plaintiffs propose preliminarily certifying the following class for settlement purposes: All persons or entities that entered into, received or made payments on, terminated, transacted in, or held an ISDAfix instrument from January 1, 2006 through January 31, 2014.

The case is No. 1:14-cv-07126-JMF.

Attorneys: Christopher M. Burke and David R. Scott (Scott + Scott, LLP), Daniel L. Brockett (Quinn Emanuel Urquhart & Sullivan, LLP), and Patrick J. Coughlin (Robbins Geller Rudman & Dowd LLP) for Alaska Electrical Pension Fund.

Companies: Alaska Electrical Pension Fund; Bank of America Corporation; Barclays Bank PLC; BNP Paribas, S.A.; Citigroup, Inc.; Credit Suisse AG; Deutsche Bank, AG; Goldman, Sachs & Co.; JPMorgan Chase & Co.; HSBC Bank plc; ICAP Capital Markets LLC; The Royal Bank of Scotland Group PLC

News: Antitrust NewYorkNews