Alaska Electrical Pension Fund, Anchorage, filed a lawsuit Thursday charging that 13 banks conspired to fix the ISDAfix benchmark rate, a “key interest rate for a broad range of interest rate derivatives and other financial instruments,” according to the filing.
The defendants are Bank of America Corp., Barclays Bank PLC, BNP Paribas SA, Citigroup, Inc., Credit Suisse AG, Deutsche Bank AG, Goldman Sachs & Co., HSBC Bank PLC, J.P. Morgan Chase & Co., Nomura Holdings Inc., Royal Bank of Scotland PLC, UBS AG, Wells Fargo & Co and broker-dealer ICAP PLC.
Through electronic chat rooms and forms of private communication, the defendants “colluded to avoid paying investors what they owed on interest rate derivatives,” according to the filing in U.S. District Court in Manhattan.
The lawsuit alleges the defendants manipulated the rates in at least three ways: by executing a series of rapid-fire transactions just before the ISDAfix was set, otherwise known as “banging the close”; delaying the reporting of rates until after the ISDAfix was manipulated; and posting a reference rate that did not reflect actual trades in the marketplace.
Trillions of dollars were affected by the manipulated rates, according to the lawsuit.
As of Dec. 31, The Alaska Electrical Pension Fund had $1.8 billion in assets.
Gregory Stokes, administrator for the pension fund, could not be reached for a comment by press time.
Daniel L. Brockett, the pension fund’s lawyer and partner at Quinn Emanuel Urquhart & Sullivan, said the pension fund’s claim is “a good case” and supported by economic data and empirical evidence.
An ICAP spokesman said in an e-mail, “We have not been served the complaint and are not prepared to comment at this time.”
Larry Grayson, spokesman for Bank of America; Mark Lane, spokesman for Barclays Bank; Nicole Sharp, spokeswoman for Credit Suisse; Amanda Williams, spokeswoman for Deutsche Bank; Tiffany Galvin, spokeswoman for Goldman Sachs; Cesaltine Gregorio, spokeswoman for BNP Paribas; Juanita Gutierrez, spokeswoman for HSBC Bank; and Danielle Romero-Apsilos, spokeswoman for Citigroup, declined to comment. Spokesmen for the other defendants could not be reached by press time.