A group of investors led by the $40.1 billion Iowa Public Employees' Retirement System, Des Moines, has reached a $499 million partial settlement in an antitrust lawsuit alleging that Morgan Stanley, Goldman Sachs, UBS, J.P. Morgan Chase & Co., Credit Suisse, Bank of America and bank joint venture EquiLend participated in a group boycott to stop the modernization of the securities lending market.
The partial settlement will leave Bank of America as the sole remaining defendant in the case, according to a closed session board meeting of one of the named plaintiffs, the $73.6 billion Los Angeles County Employees Retirement Association , Pasadena, Calif. The case is being heard in U.S. District Court in New York by Judge Katherine Polk Failla. Combined with the $81 million settlement previously signed with Credit Suisse in 2022, the partial settlement will result in a total of $580 million in cash payments to the class.
As part of the current settlement, EquiLend has agreed to specific reforms to prevent the sort of collusion and market abuse that occurred in this case as well as to provide cooperation with the ongoing lawsuit against Bank of America, said a news release from plaintiffs' co-lead counsel Cohen Milstein Sellers & Toll.
Plaintiffs alleged that when new firms tried to modernize the securities lending market, the banks conspired to boycott them, shut them down, and eliminate them as threats. The result was that investors were stuck in an "antiquated market structure" and forced to pay supracompetitive spreads to the defendant banks as intermediaries in the securities lending market, the news release said.
Other plaintiffs in the case are the $21 billion Orange County Employees Retirement System, Santa Ana, Calif.; $3.4 billion Sonoma County Employees' Retirement Association, Santa Rosa, Calif.; and trading firm Torus Capital.
A motion on the class certification is still pending a decision by the judge.