The usual suspects in the banking fraternity are the subject of another class-action suit over...
Friday, July 12, 3:07 PM ETThe usual suspects in the banking fraternity are the subject of another class-action suit over price-fixing in the CDS market, with the plaintiffs in this case being 4 Danish pension funds. The case was filed in federal court in Illinois, the same locale as a similar complaint logged in May by a labor union. Across the pond, the EU this month filed their own charges. Banks named: BAC, BCS, C, CS, DB, GS, HBC, JPM, MS, RBS, UBS, BNPQY.PK.
- Big banks are facing new allegations they conspired to control pricing and access in the lucrative credit derivatives
Four Danish pension funds filed a complaint Thursday in U.S. District Court for the Northern District of Illinois, alleging antitrust violations and saying the banks "unreasonably restrained competition" in the $25 trillion credit- default swaps market.
Thursday's class action filing follows a similar complaint filed in May, also in northern Illinois, by the Sheet Metal Workers Local No. 33 Cleveland District Pension Plan. That complaint said the banks' control of the CDS market led them to overcharge customers in the market about $7 billion a year, and seeks treble damages if the plaintiffs prevail.
The complaint also comes on the heels of action by European antitrust authorities, who also alleged improper practices in credit derivatives markets.
Both U.S. cases cite as defendants 12 banks, as well as Markit Group Ltd., a financial data provider specializing in derivatives, and the International Swaps and Derivatives Association, a global financial trade body.
The banks named in the U.S. complaints were: Bank of America Corp. ( BAC ), Barclays PLC (BCS, BARC.LN), BNP Paribas S.A. (BNPQY, BNP.FR), Citigroup Inc. ( C ), Credit Suisse Group AG (CS, CSGN.VX), Deutsche Bank AG (DB, DBK.XE), Goldman Sachs Group Inc. ( GS ), HSBC Holdings PLC (HBC, HSBA.LN, 0005.HK), J.P. Morgan Chase & Co. ( JPM ), Morgan Stanley ( MS ), Royal Bank of Scotland Group PLC (RBS, RBS.LN) and UBS AG (UBS, UBSN.VX).
Spokespeople for Bank of America, Barclays, BNP Paribas, Citi, Credit Suisse, Goldman and J.P. Morgan and RBS declined to comment. The other banks, pension plans and Markit didn't immediately return requests for comment.
A spokeswoman for ISDA said it believes "the allegations against us are without merit and that ISDA acted properly at all times."
The move by authorities constitutes the latest headache for banks already facing a wave of lawsuits on everything from mortgage bonds to alleged manipulation of interest rates.
Chris Burke, partner at Scott + Scott, which is representing the Sheet Workers pension plan, said customers in the CDS market were wary of filing their complaint because the banks control the credit markets. He said he hoped other bank customers "would join the fray."
Earlier this month, the European Commission accused Markit, along with 13 banks and ISDA, of colluding to prevent credit default swaps from trading on open exchanges.
The U.S. Department of Justice confirmed in 2009 that it had launched a probe into the possibility of anticompetitive activity in credit derivatives trading, clearing and in the information services industries supporting it, but didn't say when the probe began. That investigation is ongoing.
Prosecutors have been looking into whether dealers implemented certain arrangements that allowed them to control access to the market, both for trading and clearing CDS.
The Danish funds--Unipension Fondsmaeglerselskab, Arkitekternes Pensionskasse, MP Pension-Pensionskassen for Magistre & Psykologer, and Pensionskassen for Jordbrugsakademikere & Dyrlaeger--are seeking damages and a jury trial.