The Manipulation Monitor: A Guide to Financial Market Manipulation Antitrust Litigation

Commentary on Antitrust and Other Competition Law Litigation Relating to the Financial Services Industry.
Posted: October 2, 2018

Mexican Government Bond Defendants Seek Dismissal–Part 1

In this post, we cover a recently filed motion by the defendants in In re Mexican Government Bonds Antitrust Litigation, 18-cv-02830, (In re MGB) to dismiss Plaintiffs’ Consolidated Amended Class Action Complaint (the “Complaint”) for failure to state a claim. The motion to dismiss is available here. Certain of the defendants also have filed a motion to dismiss for lack of personal jurisdiction and improper venue, available here. This post, however, will only discuss the former motion.

Defendants’ motion to dismiss for failure to state a claim is made on several grounds, including failure to plead plausible allegations of an antitrust conspiracy, failure to plead allegations for individualized defendants, failure to establish antitrust standing, and failure to state a claim for unjust enrichment. Defendants also moved to dismiss Plaintiffs’ claims as being time-barred and barred by the Foreign Trade and Antitrust Improvements Act. This post will summarize Defendants’ arguments concerning whether Plaintiffs made plausible allegations of an antitrust conspiracy and adequately alleged allegations for individualized defendants. The remaining arguments will be summarized in a separate post.

Our July 30, 2018, post summarizes the factual allegations in the Complaint, and is worth reading first in order to fully understand defendants’ arguments.

Failure to Allege a Plausible Antitrust Conspiracy

Auction-Rigging Conspiracy. Plaintiffs allege that Defendants rigged the weekly auctions of Mexican Government Bonds (MGBs) conducted by the Mexican Government by sharing information with each other and coordinating bids to fix prices. Defendants argue that Plaintiffs fail to plead underlying evidentiary facts that allow for a plausible inference of such an unlawful agreement. In order to meet the requirement under cases such as Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009) to plead facts which allow for the plausible inference of a conspiracy, Defendants assert that Plaintiff must either show direct evidence (a “smoking gun” such as a recorded phone call) or show parallel conduct among defendants and certain “plus factors” indicating that the parallel conduct was the result of an agreement, not just coincidence or market forces.

Defendants state in their motion that the news reports cited in the Complaint do not show direct evidence. Plaintiffs cite the reports for the proposition that an unidentified defendant has been granted leniency in Mexico’s cartel leniency program. Defendants dispute that the news reports stand for that proposition. They argue that all the reports say is that an institution has agreed to cooperate with authorities; the reports do not identify the scope of the Mexican authorities’ investigation, if the cooperator is a defendant, or what the cooperator actually did.

Neither, according to the Defendants, have the Plaintiffs alleged any particular instances of parallel conduct, such as, for example, unprecedented changes in pricing structure. Defendants also walk through why each of the pieces of evidence relied upon by Plaintiffs are inadequate as plus factors, even though Defendants assert that such an analysis should be unnecessary given that no parallel conduct has been alleged.

  • News Reports: all reports say is that there is an investigation by Mexican authorities, and that an entity is cooperating with that investigation; that an investigation is taking place is, in and of itself, insufficient to raise the inference of a conspiracy.
  • Inter-firm Communications: Plaintiffs detail in their Complaint that there was a “revolving door” of employees between Defendants, such that many Mexican Government Bond traders previously worked together in the same bank, before moving on to work for another market maker. Defendants contend that a “revolving door” is inadequate as a plus factor because Plaintiffs do not detail specific communications around the time of the Mexican Government’s auction.
  • Prior Cases in Other Markets: The Complaint also detailed admissions from the Defendants and findings from various regulatory authorities purporting to show that the same Defendant banks have colluded to fix prices in other markets. Defendants argue these ‘if it happened there, it could have happened here’ allegations do not substantiate a fraud claim.

Defendants also devote a significant part of their brief to attacking the sufficiency of the economic evidence represented by statistical charts appended to the Complaint. The statistical charts, Defendants argue, are insufficient to serve as “plus factors” for several reasons: 1) they show aggregated averages which lump together different auctions and maturity periods, obscuring trends and outliers and ignoring the effects of important events like the global financial crisis and the changes in Mexico’s credit rating; they do not differentiate between defendants and non-defendants, or identify the activities of individual defendants; 3) they do not show statistically significant results; 4) they use cherry-picked data, as each chart compares a different “before” and “after” period than the other, and features a different set of bonds. Moreover, what each chart purports to show could just as easily be explained by non-anti-competitive behavior. For example, one charts purports to show that “average trading prices for auctioned MGBs tended to rise following the announcement of auction results.” However, Defendants point to scholarship that suggests that this is not due to conspiratorial conduct, but rather due to the pricing information that an auction provides the market.

Spread-Widening Conspiracy. Plaintiffs also allege that after the MGBs were initially offered on the secondary market, Defendants agreed to artificially widen the “bid-ask spread,” the difference between the bid price that a Defendant would agree to buy a particular type of MGB from a consumer and what a Defendants would agree to sell that same type of MGB for. Defendants similarly attack this allegation as conclusory, and lacking plausible evidentiary facts. Defendants point out that Plaintiffs do not even allege that the investigation by Mexican authorities pertains to the alleged spread-widening. These allegations are particularly implausible, Defendants argue, because the non-defendant suppliers of MGBs whom customers were free to buy from makes it unlikely that Defendants widened the spread on all transactions over an eleven year period.

Defendants also assert that the charts purporting to support Plaintiffs’ economic evidence of spread-widening suffer from the same defects that the charts relating to auction-rigging do. Particularly, the charts use median figures that obscure variation of bid-ask spreads for more than a decade, do not show individual defendants’ spreads, and do not claim to show statistically significant results.

Group Pleading

Defendants attack the allegation made against “Defendants” as failing to allege the conspiratorial conduct engaged in by each individual defendant; Plaintiffs “. . . fail to identify a single collusive act or communication by any individual Defendant.” Moreover, the charts purporting to support the economic evidence do not show the auction bids for each defendant, or each defendants’ bid-ask spread or fill rate. The news reports cited by defendants are similarly defective to support these generalized allegations; one report cited by Plaintiffs states that all participants in the market were under investigation, but since an investigation in and of itself cannot be an inference of a conspiracy, Plaintiffs’ allegations are insufficient.

Defendants also argue that the allegations against the Market Maker Defendants’ affiliates are also insufficient, as Plaintiffs merely plead that these entities directed and controlled the Market-Makers that bid at the auctions or that traded with Plaintiffs. Merely alleging direction and control, or corporate affiliation is conclusory and not enough to state a claim, according to Defendants.

This post was written by John F. Whelan.

We welcome your feedback. If you have questions or comments about this post, please e-mail John M. Lundin, the Manipulation Monitor’s editor, at or John F. Whelan at or call John Lundin or John Whelan at (212) 344-5400.

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Posted: September 24, 2018

Alleged Aluminum Allocation Fixing

This week we cover the allegations in the multi-district litigation In re: Aluminum Warehousing Antitrust Litigation, 1:13-md-02481-KBF (SDNY) (“In re Aluminum Antitrust Litigation”). We will leave a discussion of the subsequent motion to dismiss briefing and decision, and the appeals to a later date. In short, the Plaintiffs in In re Aluminum Antitrust Litigation allege that Defendants created a monopolistic restraint on the supply of primary aluminum, first by using a minimum per-warehouse distribution rule to monopolize market share, and then converting that minimum warehouse distribution rule into a maximum, creating delays in the distribution of Aluminum and an increase in price, despite the existence of a high market supply of primary aluminum.

Overview of the Aluminum Market

Aluminum, a very abundant metal, is used in a number of industrial products including airplanes and automobiles, packaging materials, construction materials, and consumer electronics. Primary aluminum refers to aluminum produced directly from mined ore. Large integrated producers create primary aluminum and sell to two broad categories of customers: manufacturers/processors/brokers in the physical market and traders/speculators in the resale market. After creation of primary aluminum, the supply is often warehoused.

According to Plaintiffs, demand for primary aluminum is relatively inelastic as aluminum is not readily replaceable with other metals in its various uses, regardless of price increases. Likewise, supply is also inelastic as the cost structures of smelters make it the case that they either produce at full capacity or not at all. The combination of these two market realities make it difficult for aluminum purchasers and manufacturers to fight back against price increases.

Nearly all industrial contracts for the physical delivery of primary aluminum express the price of aluminum using a formula with at least two standardized components: (1) the LME Settlement Price, the cash offered price at the end of the LME’s second morning trading session, and (2) a regional premium (e.g. the Midwest Premium, the Benchmark in the United States), which is meant to cover the cost of delivery to a customer, and which is compiled based on a reporting of the preponderance of physical transactions between buyers and sellers of spot aluminum on a given day for delivery to relevant geographic points. These components are published by private companies, including Platts and Metal Bulletin. From 2008 to 2012, the relationship between global production and demand was relatively stable, with the market tending toward surplus. Directly before the start of the Class Period, the supply of aluminum in the Midwest United States greatly increased, which should have caused the Midwest premium to decrease.

Overview of the Alleged Collusion

According to Plaintiffs, Plaintiffs, a number of first level and direct purchasers of aluminum for physical delivery within the United States, purchased primary aluminum at a price that included the London Metal Exchange (“LME”) Price, and the Midwest Premium or Midwest Transaction Price. Plaintiffs allege that Defendants, LME, Metro, Glencore, Pacorini, among others, and a number of financial institutions including Goldman Sachs and JP Morgan, worked together to unlawfully restrain trade by lengthening the amount of time it takes to load-out aluminum from warehouses, prolonging queues and restraining load-out rates in the market for warehouse services of aluminum in LME registered warehouses in the U.S. and Canada, thus causing an increase in the Midwest Premium, and consequently an increase in the price of primary aluminum.

Plaintiffs allege that in 2003, LME created a minimum rate of load-outs, 1,500 metric tons per day per warehouse location. This favored large warehouses like those held by Metro and Glencore/Pacorini. As a consequence, Metro at the time of the change of the minimum load-out rule announced that it would increase rents to at least three times the competitive rental rates. Simultaneously, regardless of actual capacity and commercial reasonableness, Metro and the other defendants entered into agreements and made the minimum rate of load-outs into a maximum. LME was aware of these limits and complicit in the agreement to use the minimum load-out rule as the maximum rate. Through a web of agreements Metro shared its profits with its co-conspirators, including Burgess-Allen and Glencore. One mechanism used was the illusory cancellation of LME warrants. The Defendants also worked together to shift aluminum among their warehouses in order to concentrate the stock at key warehouse locations.

According to Plaintiffs, LME made increased profits through increased rental revenues. The Goldman Defendants had full knowledge of Metro’s anti-competitive actions and helped facilitate them, especially through using their control of the LME’s rulemaking process to make sure that the minimum rule remained in effect, and lobbying with LME to the same end. The bank defendants made a profit from taking advantage of prevailing market contango, selling short positions on futures and taking advantage of the long positions of the industrial Plaintiffs taken as a hedge against increases in the LME primary aluminum price. The Goldman Defendants also profited through the increased value of aluminum owned by its J. Aron subsidiary. The Goldman, JPMorgan and other Defendants benefited as at the time LME was sold to a Hong-Kong Exchanges & Clearing, and they made a profit off the sale of their shares for a combined $468 million.


Plaintiffs sought damages, injunctions and declaratory relief under Section 1 and 2 of the Sherman Act, 15 U.S.C. § 1, the Michigan Antitrust Reform Act, MCL §§ 445.773, the Donnelly Act of New York General Business Law § 340, et seq., among other state antitrust and unfair trade practices statutes, and claims for unjust enrichment.

This post was written by Lee J. Rubin.

We welcome your feedback. If you have questions or comments about this post, please e-mail John M. Lundin, the Manipulation Monitor’s editor, at or Lee J. Rubin at or call John or Lee at (212) 344-5400.

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Posted: September 18, 2018

The VIX is Fixed?! A Preview of the Tricks

A new [academic] year, a new manipulation to monitor. Today’s subject is none other than the fixing of the VIX.

It’s time for a trip back in time. Not very far back, though – just to the 23rd of May, 2017, the date on which John Griffin and Amin Shams published Manipulation in the VIX?, a 37-page (or 57-with-references), extensively researched, paper on, manipulation of the Chicago Board Options Exchange’s (CBOE) Volatility Index (VIX). VIX is a widely tracked index that gauges the 30-day implied volatility of the market, and, while Griffin and Shams couldn’t muster up a particularly exciting title for their own paper, the VIX itself is often referred to as the market’s “fear index” or “fear-gauge.”

As the litigation-minded among you might expect, this publication set off more than a few alarm bells – and had in house counsel calling their lawyers. Between March and July of 2018, more than twenty-eight VIX manipulation actions were filed; they now have been MDL’d to Judge Manish S. Shah of the Northern District of Illinois as In re: Chicago Board Options Exchange Volatility Index Manipulation Antitrust Litigation., No. 1:18-cv-04171, MDL No. 2842 (N.D. Ill.). The plaintiffs in these cases vary, but are largely investors and other trading firms, many of which are Chicago-based. Named defendants include the various CBOE entities, but several cases are also captioned as “[Plaintiff] v. Does” — without insight into the CBOE data bases, Plaintiffs aren’t yet able to identify the parties responsible for the alleged manipulation.

The consolidated master amended complaint (“CMAC”) is now due on September 19, 2018, while a joint status report proposing a briefing schedule for motions to dismiss is to be filed by October 5, 2018. The Manipulation Monitor will be following this one closely, so watch this space for details. But while we wait for the official MDL complaint, the time seems ripe—given that we have an academic paper and nearly thirty complaints already in existence—to set up our blogging on this line of cases with some background on the VIX itself, and exactly how the Doe defendants achieved “mischief managed” status.

The Building Bricks of the VIX

So, let’s start with the major players. The CBOE is the largest options exchange in the U.S., and offers options contracts on hundreds of stocks and exchange-traded funds, as well several popular stock indexes. Trading on the CBOE happens through a clearing mechanism provided by the Options Clearing Corporation (“OCC”), which brings together buyers and sellers and handles all subsequent transfers of securities or cash between option buyers and sellers at expiration. The CBOE Volatility Index—or “the VIX,” as we’ve been referring to it, whilst wondering if Drake named this one as well—is based on real-time prices of near-the-money options on the S&P 500 Index (“SPX”), and is designed to reflect the investors’ consensus view of the future (at least, the 30-day future) expected stock market volatility. The “fear index” received its nickname from its tendency to spike significantly when investors believe the market is behaving bearishly.

Allegations in the various complaints involve futures and options contracts linked to the VIX Index, which are traded on the CBOE Futures Exchange (“CFE”). While the first exchange-traded VIX futures contract was only introduced in 2004—and VIX options contracts in 2006—combined trading activity has grown to over 800,000 contracts per day, and 2017 saw record-setting trading volumes for both products. It is the unusual settlement procedures for these VIX contracts that, according to Griffin and Shams, render the market susceptible to manipulation.

When a futures or options contract expires, the settlement price—the reference price against which the contract is measured—is a critical variable. If the settlement price can be manipulated, then so too can the value of the derivatives at settlement. Usually, a settlement price would be based on the spot price of the underlying assets. In contrast, the settlement price for a VIX contract is determined by a monthly auction that yields a price quoted using the ticker symbol VRO. This auction is conducted using a Hybrid Opening System, or “HOSS,” in which traders submit bids and offers for SPX options listed by the CBOE; this yields an opening price for such options from which VRO is calculated. VRO in turn determines the final settlement value of VIX derivatives. This auction starts at 7:30am Chicago time, and ends an hour later, when trading on non-expiring VIX futures and options begin.

Verily Verily, VIX is but a Dream

According to Griffin & Shams, there are three features about the VIX that “might leave it open to manipulation: multiple connected markets with different price-order elasticities, cash settlement, and a finite window to manipulate.” The first factor has to do with the fact, explained above, that there are actually two different markets at play here. The “lower level” SPX options market—to which the “upper level” VIX derivatives market is tied—is fairly illiquid, with large bid-ask spreads, while the VIX derivates are large and liquid. This means that a comparatively small number of trades in the SPX options market can move the price of those options significantly; these price movements will have a corresponding, and disproportionately large, effect on the VIX. The second factor, cash settlement, ties into these price movements. Unlike an asset with a physical settlement—where an anomalous price at settlement would just result in an investor taking possession of a physical asset at an inflated price—if the VIX is artificially inflated at settlement, the would-be manipulator can cash out their position at the deviated price. The third factor is the short period of time concerned. The one-hour period of the auction means that a would-be manipulator need only intervene for a very discrete period of time. Manipulation for the low-energy types, if you will.

Manipulation in the VIX goes on to explain exactly how the theoretical VIX tricksters have carried out their scheme. Keeping in the theme of threes, the triad of steps required for such manipulation include: (1) opening long positions in the VIX derivatives prior to settlement; (2) submitting aggressive buy orders in the SPX options during the settlement auction, causing the auction-clearing of prices of SPX options to rise, and, with them, the VIX settlement prices; and, finally, (3) obtaining the higher price for the upper-level VIX futures or options when they settle.

Griffin and Shams point out that such trading will leave reviewable patterns in the data, and their paper, quite naturally, goes on to review just that. For starters, they highlight spikes in average daily trade values that are not related to any S&P 500 market-related event, but solely to the date of VIX settlement. These volume increases occur primarily on options with VIX sensitivity, and researchers found that “the relationship is highly statistically significant.” Because the pattern of trading spikes is not observable in other, nearly identical, OEX and SPY options, or even in ITM options excluded from VIX settlement calculations, they conclude that this “evidence consistent with attempted manipulative activity.”

Being the thorough academics that they are, Griffin and Shams also considered whether any alternative phenomena could be driving SPX option trading volume spikes at settlement. For example, they investigate whether the VIX settlement option provides an opportunity for those with “pent up demand”—stemming from the normally illiquid SPX market—to trade deep OTM options. This theory was scuppered by their observation that comparable OTM options actually traded at lower volumes at the time of settlement. The pair further considered two possible hedging explanations, but were able to show both that traders were not attempting to hedge positions in VIX derivatives through the underlying SPX options, nor were rolling their hedging positions into SPX options in a way that mimicked the VIX weighting formula.

Observing all of these patterns, Griffin and Shams concluded that the most likely explanation for the market behavior that they could see was, in short, manipulation.

What they could not do, however, was identify the manipulators. Electronic trading on the CFE and CBOE is conducted anonymously, and only the CBOE—and the manipulators themselves—know the identities of the parties entering the manipulative orders that the researchers have observed. Luckily for Plaintiffs, the CBOE and CFE are central repositories of a range of information related to the trades. The only now question is how many associates will it take to parse the results of the (eventual) discovery demands . . . .


Details on the specific legal allegations and potential damages to be discussed in our next installment, so watch this space for real-time* updates.

*Okay, maybe not quite real time. I’m not NBC’s Sprinting Intern . . .

This post was written by Alexandra M.C. Douglas.

We welcome your feedback. If you have questions or comments about this post, please e-mail John M. Lundin, the Manipulation Monitor’s editor, at or Alexandra M.C. Douglas at or call John or Alexandra at (212) 344-5400.

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Posted: September 10, 2018

The LIBOR Over-the-Counter Defendants Argue That Their Transactions Were Above the Board

In this post, we provide an update on our August 20, 2018, post that reported on the motion of LIBOR Defendants Bank of America, N.A. and JP Morgan Chase Bank, N.A. (together, the “OTC Defendants” or “Defendants”) for partial judgment on the pleadings, under Federal Rule of Civil Procedure 12(c) to dismiss the OTC Plaintiff Class’ antitrust claims, and the OTC Plaintiffs’ related opposition. In their motion, the OTC Defendants seek to eliminate antitrust claims for transactions where a member of the panel involved in setting the LIBOR interest rate was not both the issuer and direct seller by arguing that the OTC Plaintiffs cannot be “efficient enforcers” of antitrust claims in order to have standing to bring antitrust claims for such transactions.

On August 24, 2018, the OTC Defendants filed their reply memorandum of law. We will summarize the arguments made in the OTC Defendants’ reply.

Affiliated Counterparties

Concerning transactions where plaintiff’s only counterparties were the panel members’ affiliates or subsidiaries, the OTC Plaintiffs’ argued in their opposition that the OTC Defendants’ assertions that the panel members were not involved and did not benefit from LIBOR-based transactions were belied by reports showing that the purpose of the subsidiaries and/or affiliates was to serve the management of interest rate risk across an entire corporate structure. On reply, the Defendants argue that these reports cannot be considered on a motion for judgment on the pleadings, as they are extrinsic to the OTC Plaintiffs’ complaint, which, according to Defendants, does not even plead that the panel members were involved in their affiliates’ decisions to incorporate LIBOR. Defendants also make the point that it does not follow that since subsidiaries and affiliates were a part of a corporate structure that managed interest rate risk, that panel member banks influenced decisions of affiliates to incorporate LIBOR-interest rate into transactions.

The OTC Plaintiffs also argued in the opposition that the panel members and their related affiliates could be found to be a “single enterprise” for purposes of antitrust liability, since the panel members fixed LIBOR-interest rates and the affiliates and subsidiaries sold them. The OTC Defendants argue in response that the case cited by the OTC Plaintiffs in support of this argument, Arandell Corp. v. Centerpoint Energy Servs., 2018 WL 3716026 (9th Cir. Aug. 6, 2018), requires independent participation by each party in the enterprise, but OTC Plaintiffs have not shown that the decisions by affiliates to incorporate the LIBOR-interest rate were part of an actual conspiracy, or anything but independent decisions.

Efficient Enforcer

The OTC Defendants also addressed each of the factors in the “efficient enforcement” test in their reply. The OTC Defendants assert that even if all the other factors besides that of the chain of causation to the asserted injury weighed in the OTC Plaintiffs’ favor, it would not matter, since In re Libor (“LIBOR VI”), 2016 WL 7378980 (S.D.N.Y. Dec. 20, 2016), found the chain of causation factor to be dispositive. Defendants also push back against the assertion that the other factors balance out in the OTC Plaintiffs’ favor: the “more direct victims” factor carries little weight since it vitiates the chain of causation factor, and, in any event, does not favor Plaintiffs because transactions with panel members are “more direct” than transactions with panel members’ subsidiaries or affiliates. Defendants also asserted that the speculation of damages factor did not favor the OTC Plaintiffs.

Regarding the transactions where the panel banks were merely the sellers and the issuers were affiliates or subsidiaries of the panel members, the OTC Defendants again argue that the decision to incorporate the LIBOR-interest rate is an “independent decision” of the affiliate or subsidiary, and “breaks the chain” of causation such that the efficient enforcer test cannot be met.

In its opposition, the OTC Plaintiffs cited In re Libor (“LIBOR V”), 2015 WL 6696407 (S.D.N.Y. Nov. 3, 2015) for the proposition that the panel members could still be liable for subsidiary or affiliate-issued LIBOR-based bonds. Defendants retort that LIBOR V instead held that panel member Credit Suisse Group AG was a counterparty to the transaction at issue because its affiliate acted as its agent in the transactions. LIBOR V is inapplicable because the OTC Plaintiffs’ complaint does not contain any agency allegations and, as LIBOR V held, mere corporate ownership does not create a principal-agent relationship.

Panel Member – Issuers

Concerning transactions where the panel member was an issuer, but the seller was an affiliate or another panel member’s affiliate, the OTC Defendants contest the OTC Plaintiffs’ argument that the direct purchaser rule under Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977) (“Illinois Brick”), which requires that the price-fixed product be purchased directly from the alleged co-conspirator in order for the purchaser to have standing to bring antitrust claims, is inapplicable. The OTC Plaintiffs argued that the Illinois Brick rule applies to price-fixed goods, not securities. The OTC Defendants point out, however, that In re NASDAQ Mkt.-Makers Antitrust Litig., 169 F.R.D. 493 (S.D.N.Y. 1996), upon which the OTC Plaintiffs relied for that proposition, did not apply the direct purchaser rule because the brokers who owned the securities were not defendant-owned, and thus the “control” exception did not apply, not because the securities did not move up and downstream in the market such that duplicative recovery is a concern, as the OTC Plaintiffs suggested.

The OTC Defendants also push back against the OTC Plaintiffs’ assertions that the concerns about double-recovery and apportionment do not exist here as they do with the price-fixed goods in Illinois Brick. Defendants provide an example wherein a plaintiff buys a security at a reduced price because of the alleged suppression of the LIBOR-interest rate, and then sells the security at a reduced price, also because of the alleged suppression. “If the instrument is then resold during the alleged suppression period, the reduced price will be passed on to the subsequent purchaser, triggering the same double recovery/apportionment concern that animates Illinois Brick.”

Finally, the OTC Defendants insist that there are no “practical considerations” which warrant an exception to Illinois Brick, since this case involves direct purchasers, Illinois Brick is on point.


We will be sure to update this series again when the motion to dismiss is decided by the Court; stay tuned to this blog.

This post was written by John F. Whelan.

We welcome your feedback. If you have questions or comments about this post, please e-mail John M. Lundin, the Manipulation Monitor’s editor, at or John F. Whelan at or call John Lundin or John Whelan at (212) 344-5400.

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Posted: September 4, 2018

SSA Swindling? – Part II – Dismissal With Leave to Replead for Failure to Allege Injury in Fact

This week, we follow last week’s dismissal of In re SSA Bonds Antitrust Litigation, No. 1:16-cv-03711-ER (SDNY) (“In re SSA“), an action first introduced in our June 27, 2018, post, where one can find a full account of the alleged collusion in the Amended Complaint. In this post, we focus on the Defendants’ December 12, 2017, Joint Memorandum of Law in Support of the Motion to Dismiss, and Judge Ramos’ August 24, 2018, Opinion and Order granting the Motion to Dismiss.

Brief Overview of the Alleged Collusion

In brief, Plaintiffs are buy side funds, such as pension and retirement funds and asset management companies. They alleged that the Defendants, large dealer banks including but not limited to Bank of America, Barclays, and Credit Suisse, used their position as major players in the supranational, sub-Sovereign, and agency bonds (“SSA”) market to manipulate the bid-ask spread on SSA bonds. Plaintiffs based their allegations primarily on about 150 chats, phone calls, and other correspondence among individuals employed at the dealer-banks regarding certain deals. These 150 communications were produced by Bank of America and Deutsche Bank. After the Plaintiffs filed their complaint, certain defendants settled the case. This included Bank of America and Deutsche Bank, who settled for a combined $65.5 million in August of 2017.

Defendants’ Motion to Dismiss

The Defendants moved to dismiss the case in late 2017, arguing that the Plaintiffs lacked antitrust standing, and otherwise failed to state a claim because the Plaintiffs, relying mostly on the 150 communications, were unable to point to a transaction with an artificially set price of which Defendants were a part. Defendants asserted that Plaintiffs’ claim that they were injured because they transacted during a period when the entire SSA market was “rigged” were both implausible and unsubstantiated.

According to Defendants, Plaintiffs were not efficient enforcers because their claims were too remote and indirect, more efficient enforcers exist, and damages done to them were too speculative. Plaintiffs’ argument that Defendants participated in a decade-long global conspiracy to manipulate the entire SSA bonds market was implausible. Plaintiffs were unable to allege that the Defendants participated in the conspiracy with any evidence besides the correspondence among a handful of individuals dealing with a handful of deals. The allegation that they set artificial prices for a few particular deals, even if proven true, could not substantiate the claim that the entire market was rigged or that the Defendants participated in any misconduct in connection with Plaintiffs’ deals. Further, Plaintiffs did not allege a conspiracy because they failed to allege an industry-wide mechanism or benchmark that affected prices, or that every major bond dealer was involved in the alleged conspiracy. Additionally, Plaintiffs failed to allege that Defendants were participating in the conspiracy throughout the alleged class period.

Additionally, Defendants asserted that Plaintiffs abandoned attempts at providing sufficient allegations of SSA rigging using economic analysis, and that the economic literature provided by Plaintiffs was totally irrelevant. As a consequence, Plaintiffs did not plausibly allege an injury, and their complaint should be dismissed.

The Southern District Dismisses without Prejudice and with Leave to Replead

In late August of 2018, Judge Ramos granted Defendants’ motion dismissing Plaintiffs’ Consolidated Amended Complaint for failure to state a claim because Plaintiffs failed to allege injury-in-fact sufficient to establish antitrust standing, with leave to replead until October 23, 2018. Judge Ramos based his decision primarily on the fact that, as Plaintiffs had not purchased any of the deals in question, the 150 communications on which Plaintiffs relied were not sufficient to plausibly allege a widespread conspiracy which harmed Plaintiffs, and therefore Plaintiffs had not alleged injury-in-fact sufficient to establish standing.

Judge Ramos did note that Plaintiffs could however satisfy the pleading standard with statistical analyses which would show a comparison of bid-ask spreads paid by class members to spreads made on comparable instruments after the period of collusion ended. However, as Plaintiffs Amended Complaint lacked any allegations providing this statistical analyses Judge Ramos dismissed the Amended Complaint. Judge Ramos however made a finding that it was not yet futile for Plaintiffs to replead, and granted Plaintiffs the right to do so.

This post was written by Lee J. Rubin.

We welcome your feedback. If you have questions or comments about this post, please e-mail John M. Lundin, the Manipulation Monitor’s editor, at or Lee J. Rubin at or call John or Lee at (212) 344-5400.

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Posted: August 27, 2018

Stock Loan Lowdown: Fourth Time’s (still not quite) the Final . . . and Time Will Tell if it’s the Charm

Hello again, fair followers. Presented today for your pleasurable perusal is this pithy pandect of the penultimate paper in the Prime Broker Defendant’s Motion to Dismiss procedure. If perhaps you are pondering the precise past of Defendant’s process in pushing back, I present the proximate program over which I propose you pore:

Stock Loan Lowdown
Stock Loan Lowdown, Part Two: To Dismiss or Not to Dismiss?
Stock Loan Lowdown: Third Time Through the Order

And now to the meat of the matter: does the Defendant’s robust reply result in any real issues to plague the Plaintiffs?

Play It Again, Sam – Plaintiffs Fail To Allege A Plausible Antitrust Conspiracy

The bulk of Defendant’s reply brief is focused on the plausibility of the conspiracy laid out by the Plaintiffs. Nothing in Plaintiff’s opposition, they argue, successfully counters the key defects in the conspiracy: the marketplace lacked clearing brokers necessary to support anonymous trading; the industry was not suited to such trading because loaned securities could be recalled at any time; and the presence of agent-lenders at EquiLend board meetings—individuals whose interests would not have supported such a conspiracy.

First, Defendants point out, there is no clearing mandate for stock loans—no OCC bylaws requiring lenders and borrowers to rely on OCC clearing members to clear their trades—and as of yet none of the OCC members have entered the business of clearing stock loans for third parties. Without clearing arrangements, Defendants argue, such trades cannot be sustained. Moreover, Plaintiff’s argument that clearing would be possible if any of the OCC members did so enter the business is insufficient, according to Defendants, where plaintiffs fail to explain why Defendants (and other OCC members) would have chosen to do so, absent a regulatory mandate.

Second, Defendants argue that Plaintiffs have offered no explanation for the Defendant’s apparent ability to perpetrate a conspiracy in full view of the other members of Equilend’s other board members—namely, the large agent-lenders, such as BlackRock, Northern Trust, and State Street, all of whom represent many of the conspiracy’s alleged victims. The Plaintiffs argued, in their opposition, that the agent lenders may have had “their own incentives to preserve the status quo.” Defendants point out that such justifications are not only unpled, but directly contradicted by statements in the Plaintiff’s complaint. In support of this contention, Defendants point to statements such as “numerous agent lenders supported AQS,” and insist that, if agent lenders were in fact part of the alleged conspiracy, Plaintiffs should have pled as much.

Third, with respect to Plaintiff’s arguments concerning the recall of stocks—namely, that such issues could be overcome by the use of variances in risk premiums—Defendants simply point to their lack of citation or explanation for such a process. They further argue that the industry support Plaintiffs claim that the AQS project had amounts to little: those investors and supporters “would not have been the first to anticipate incorrectly market or regulatory evolution on central clearing.”

Defendants next shift to Plaintiff’s claims of direct evidence, and find that they “fall[] flat.” To be direct, Defendants note, such evidence must be both explicit and requiring no inference to establish the proposition asserted. The conversations Plaintiffs offer are, at best, inferences based on circumstantial evidence, and a far cry from an admission of an explicit agreement to boycott. What’s more, all direct evidence cited by the Plaintiffs pertains to the joint venture—not to the alleged agreement among Defendants as to what they would do outside of that venture.

Defendants next attack Plaintiff’s apparent reliance on group pleading. While the courts may allow pleadings that do not make defendant-by-defendant allegations, the “dispositive issue” is whether it is adequately pled that they “in their individual capacities, consciously committed themselves to [a] common scheme designed to achieve an unlawful objective” (a proposition for which defendants cite the SDNY IRS case). Plaintiffs, according to this reply, do not even attempt to satisfy that standard.

Next up are allegations of parallel conduct—as one might expect, Defendants again found these to be inadequate. First, they argue, the conduct described by Plaintiffs was more divergent than parallel: for example, multiple Defendants joined, used, or invested in AQS, which clearly diverges from a boycott. By the same token, it can hardly be said that Defendants all boycotted all three platforms. Moreover, any parallel behavior that can be said to exist is, as per Defendants, “mere inaction.” For example, Defendants point to the fact that there are no allegations that that the Defendants had anything to do with OCC clearing rules—so how could they have “imposed unnecessary conditions on their clearing connections?”.

Defendants next turn to the Plaintiffs’ proffered “plus factors,” arguing that the purported high-level of inter-Defendant communications cannot possibly create an inference of conspiracy in an industry in which inter-broker communications are commonplace. The communications cited by Plaintiffs are “routine,” defendants insist, and cannot on their own plausibly allege a high level of communications. Defendants also pooh-pooh Plaintiff’s claim of a “common motive to preserve their supracompetitive profits”: all industry participants seek high profits, and allegations of a profit motive utterly fail to supply a plus factor.

Hit It Again, Harry* – Plaintiffs Fail To Salvage Their Claim Based On The EquiLend Conspiracy

Defendants in this section latch on to Plaintiff’s contention that the Complaint primarily concerns an agreement among the Defendants as to their actions outside the joint venture—not the actions taken within EquiLend. To the contrary, Defendants argue: the antitrust claim described by Plaintiffs in fact rests largely, if not primarily, on allegations regarding EquiLend that are, in fact, entirely consistent with lawful joint-venture conduct.

First, Defendants argue that the allegations concerning participation in EquiLend are subject to the rule of reason. Because Plaintiffs concede that EquiLend’s platform offered some operational efficiencies, and do not attempt to argue that EquiLend was “an illegitimate shell,” the conduct described—such as EquiLend’s creation and pricing of DataLend, and purchases of both AQS and SL-x’s intellectual property—it should be subject to the rule of reason as the internal decisions of a legitimate joint venture. To counter Plaintiff’s insistence that the allegations involving EquiLend must properly be considered as a whole, Defendants point out that, in order to examine a claim as a whole, one must first analyze its individual allegations.

Having established to their satisfaction that Plaintiffs cannot avoid the application of the rule of reason, Defendants then shift to arguing why Plaintiffs fail to allege a rule-of-reason claim. Under that analysis, Plaintiffs would be required to show that the alleged agreement produced an adverse, anti-competitive effect within the relevant market. Defendants first attack whether the Plaintiffs have adequately alleged that the stock loan market is a relevant antitrust market, insisting that, while the individual Defendants may compete in the stock loan market, Plaintiffs have not alleged that the joint venture, EquiLend competes with them there, or, in fact, that it has any presence in any market. Without any participation in a market, EquiLend cannot, and does not, have the ability to adversely affect competition. Defendants further invite the court to decline Plaintiff’s invitation to truncate the rule of reason analysis, insisting that the alleged conduct was not, as Plaintiffs claim, “obviously anti-competitive.” As an example here, Defendants cite EquiLend’s creation and pricing of DataLend: how can the creation of a new service, with superior data and lower prices, created specifically to compete with a market incumbent, possibly be an example of anticompetitive behavior, they ask?

Pay It Forward, Paul – Plaintiffs Injuries Are Too Speculative To Confer Antitrust Standing

Defendants continue to argue that Plaintiffs injuries, based on “vague allegations” that SL-x and Data Explorers would have increased efficiency, price competition, and transparency, simply do not identify damages that the borrowers and lenders in any sufficient detail. Moreover, while the Complaint argues that the imposition of an electronic, all-to-all trading platform, like that of AQS, would have resulted in better prices, that contention simply does not apply to Data Explorers – a pricing service – and SL-x, a platform non-operational in the US.

Furthermore, Defendants argue, AQS could not have succeeded without clearing brokers to provide access to central clearing. While more than sixty brokerage firms have stock lending clearing privileges, Plaintiffs do not dispute that none of those firms have entered the business of clearing loans for other entities. Their presence, Defendants argue, is a precondition to the success of AQS—and thus to any improvements in pricing—and their absence cannot be attributed to the alleged scheme.

Time’s Up, Tony – Plaintiffs Have No Answer To The Statute Of Limitations

Finally, Defendants insist that Plaintiffs claims are time-bared insofar as it seeks damages for conduct that allegedly first caused injury before August 16, 2013. Plaintiffs arguments to the contrary fail first, because they misstate the law of accrual, and, second, because they do not successfully defend the sufficiency of their fraudulent concealment claim.

Plaintiff’s opposition asserted that the limitations period runs not from when Defendants acted, but from when the injury occurred. Defendants point out that, to the contrary, a Section 1 claim accrues when “the defendant commits an act that injures the plaintiff.” Much of the supposedly wrongful conduct—including the boycott of DataExplorers, and many of the SL-x allegations—occurred outside of the four-year limitations period, and, according to the allegations, caused contemporaneous injury. Because the conduct and initial injury occurred more than four years prior to the original complaint, the statute of limitations bars any recovery of damages caused by that conduct.

Plaintiffs argued that, notwithstanding the early date of Defendants actions, their claims were timely because the stratified the pleading standard for tolling. Defendants argue that, to the contrary, Plaintiffs allegations fall short on all three elements: concealment, ignorance, and diligence. First, the alleged conspiracy was not self-concealing, as the EquiLend platform and its ownership was public knowledge, and Plaintiffs did not adequately allege affirmative acts of concealment by defendants; to the extent that they cite any acts, they fail to identify which occurred prior to August 2013. Against claims of ignorance, Defendants point again to the 2009 Global Custodian article quoted in Plaintiff’s own complaint, stating that it must have, at least, placed plaintiffs on inquiry notice. And on diligence, Defendants claim that Plaintiff’s reading of the Rule 9(b) requirement to say that “a plaintiff’s diligence is often satisfied by allegations of a defendants concealment” is inadequate, as it functionally reads the diligence requirement out of existence. Moreover, Plaintiffs fail to explain what happened during the limitations period to prompt the investigation by counsel that resulted in the lengthy complaint—and without that, it is impossible, as per Defendants, to ascertain whether Plaintiffs could or should have discovered their claim within the period.


And with that, I will close this post; we’ll update this series again when the motion to dismiss decision comes down, so stay tuned for developments.

*No, you’re not missing a reference. Call it creative license.

This post was written by Alexandra M.C. Douglas.

We welcome your feedback. If you have questions or comments about this post, please e-mail John M. Lundin, the Manipulation Monitor’s editor, at or Alexandra M.C. Douglas at or call John or Alexandra at (212) 344-5400.

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Posted: August 20, 2018

LIBOR–The Over-the-Counter Defendants’ Motion to Dismiss

In this post, we cover recently filed briefing in In Re: Libor-Based Financial Instruments Antitrust Litigation, 11-MD-02262 (“In re Libor“), the multi-district litigation in the Southern District of New York comprised of actions filed across the United States since 2011 relating to manipulation of LIBOR (the London Interbank Offered Rate) for the U.S. dollar.

Some may find it hard to believe that there can still be pre-trial dispositive motions being litigated in cases that have been around for seven years; yet, on July 13, 2018, LIBOR Defendants Bank of America, N.A. and JP Morgan Chase Bank, N.A. (together, the “OTC Defendants”) moved for partial judgment on the pleadings under Federal Rule of Civil Procedure 12(c) to dismiss the OTC Plaintiff Class’ antitrust claims based on transactions with, or on which interest is paid by, subsidiaries or affiliates of a U.S. Dollar LIBOR panel bank. The OTC Plaintiff Class (“OTC Plaintiffs”) filed an opposition to the OTC Defendants’ motion on August 9. We will summarize the arguments made by both parties in their respective motions.

If you are generally unfamiliar with LIBOR, it may be worth reading our June 6, 2018, post, which provided a general overview of the factual allegations in In re Libor, first, before reading on here. It is important to remember that the LIBOR interest rate was calculated using daily submissions from banks that made up a panel composed by the British Bankers Association. The OTC Plaintiffs generally consist of those who bought an interest rate swap or bond/floating rate note tied to the LIBOR rate directly from a panel-member bank (or one of its affiliates) (although the actual class definition is more complicated than that).

Requirements for Antitrust Standing Generally

As stated in a previous decision in In re Libor, in order to have standing to assert antitrust claims, it is required that a plaintiff allege “that it (1) has experienced antitrust injury and (2) is an efficient enforcer of the antitrust laws . . . .” In re Libor (“LIBOR VI”), 2016 WL 7378980 at *1 (S.D.N.Y. Dec. 20, 2016). There are four factors that guide whether a plaintiff will be an efficient enforcer of antitrust laws: “(1) the directness or indirectness of the asserted injury, which requires evaluation of the chain of causation linking appellants’ asserted injury and the Banks’ alleged price-fixing; (2) the existence of more direct victims of the alleged conspiracy; (3) the extent to which appellants’ damages claim is highly speculative; and (4) the importance of avoiding either the risk of duplicate recoveries on the one hand, or the danger of complex apportionment of damages on the other.” Gelboim v. Bank of Am. Corp., 823 F.3d 759, 778 (2nd Cir. 2016) (quoting Associated Gen. Contractors of Calif., Inc. v. Calif. State Council of Carpenters, 459 U.S. 519, 540 – 545 (1983)). The efficient enforcer test is meant to guide “whether the putative plaintiff is a proper party to perform the office of a private attorney general and thereby vindicate the public interest in antitrust enforcement.” Id.

The OTC Defendants’ Argument

The OTC Defendants contend that the OTC Plaintiffs do not have standing to assert antitrust claims for the following types of transactions: 1) where the plaintiff’s only counter-parties were panel members’ affiliates or subsidiaries, but not any actual panel member; 2) transactions where the issuer was not the panel member, but rather an affiliate or subsidiary of the panel member, and the panel member’s only role was as that of a seller; and 3) where the panel member was an issuer, but the seller was an affiliate or another panel member’s affiliate.

The OTC Defendants argue that the decision to incorporate the LIBOR rate the first type of transaction would be made independent of the panel member and is therefore an “independent decision” that severs the causal chain required by the efficient enforcer test’s causation factor. The OTC Defendants cite to the Court’s decision in LIBOR VI; in that case, the Court ruled that a class of bondholder plaintiffs could not be an efficient enforcer where the plaintiffs’ counter-party was not a panel bank, and dismissed plaintiffs’ antitrust claims accordingly.

The OTC Defendants also point to the Court’s holdings from LIBOR VI that plaintiffs have not pleaded facts to show that the panel members participated in the suppression of LIBOR, and that panel member banks are the proper defendant for persistent suppression claims. Although they admit that those holdings pertained to the question of who the appropriate defendants are, not whether plaintiffs are efficient enforcers of antitrust law, the OTC Defendants submit that the reasoning should nevertheless apply here. Finally, the OTC Defendants contend that the OTC Defendants have not asserted any allegations to suggest that the panel member’s affiliates and subsidiaries were not independent.

The OTC Plaintiffs’ argument that the OTC Plaintiffs have no standing to assert antitrust claims for the second type of transactions uses similar reasoning as to that of the first type of transactions. According to the OTC Defendants, the OTC Plaintiffs have not alleged facts to suggest that where the panel member was a mere seller, that it would have been the one to decide to incorporate LIBOR rates into the transaction. Since the decision to incorporate LIBOR is independent of the panel member, and the causal chain required by the efficient enforcer test’s causation factor is severed, the OTC Plaintiffs do not have antitrust standing for those transactions.

For their argument that there is no standing for antitrust claims where the panel member was an issuer, but the seller was an affiliate or another panel member’s affiliate, the OTC Defendants rely on Illinois Brick Co. v. Illinois, 431 U.S. 720, 736 (1977). In that case, the Supreme Court ruled that, with certain exceptions (which the OTC Defendants argue are inapplicable), “only direct purchasers have standing to bring civil antitrust claims.” In other words, to have standing to bring an antitrust claim under the Clayton Act, one must purchase the price-fixed product directly from the alleged co-conspirator.

Although OTC Defendants concede that there is an exception under this rule for when the defendant owns or controls the entity that sold the goods, they argue that the exception only applies where there is such functional unity between the defendant and the seller-entity that the defendant controls the seller-entity and sets the prices of the product in question. The OTC Defendants point out that the OTC Plaintiffs have not alleged that the panel members decided to incorporate LIBOR in these type of transactions. The Illinois Brick rule therefore prohibits standing to assert antitrust claims where the panel member was only an issuer.

The OTC Plaintiffs’ Argument

The OTC Plaintiffs argue in response by first contesting that panel members were not involved and did not benefit from LIBOR-based transactions involving their subsidiaries and affiliates such that there is no causal link between the panel members and transactions involving their affiliates and subsidiaries. They contend that although the Court previously found that defendants had no control over, input in, and profit from the Bondholder’s LIBOR-based transactions, the OTC Defendants in fact did control, have input in, and profit from the OTC Plaintiffs’ transactions. They point to published reports from Bank of America and JP Morgan Chase & Co. showing that the OTC Defendants’ subsidiaries and/or affiliates served to manage interest rate risk across the entire corporate structure. The OTC Plaintiffs also note that the equivalent of the treasury department set “transfer pricing” across different departments and ensured that the customer-facing segments of the main bank did not buy or sell instruments above the panel member’s LIBOR submission. Finally, they note that in LIBOR VI, the only case that the OTC Defendants relied on besides Illinois Brick, the Court specifically stated that the “antitrust laws do not require a plaintiff to have purchased directly from a defendant to have antitrust standing. 2016 WL 7378980 at *16.

The OTC Plaintiffs then note that the OTC Defendants ignore the other three factors in the efficient enforcer test. Since there is no difference in motivation of enforcement of antitrust laws between those who transact only with a panel member and those who transact with a subsidiary, the theory of damages is no more speculative when it comes to transactions with subsidiaries and affiliates and the court has already said that there is no danger of duplicative recovery when damages are tied to particular transactions.

Every factor in the efficient enforcer test, according to the OTC Plaintiffs, goes in their favor.

The OTC Plaintiffs also cite Arandell Corp. v. Centerpoint Energy Servs., 2018 WL 3716026 (9th Cir. Aug. 6, 2018), to support the assertion that parents and wholly-owned subsidiaries are treated as a single enterprise when they engage in coordinated activity for an illegal, anti-competitive purpose. In Arandell, the Court held that a subsidiary-gas seller could be liable for advancing anti-competitive conduct and named as a defendant selling gas at prices fixed by its parent and the parent and subsidiary shared profits with each other. According to the OTC Plaintiffs, since the panel members fixed the LIBOR rates, they and their respective affiliates and subsidiaries who sold and issued the transactions should be treated as a single enterprise.

The OTC Plaintiffs also push back against the OTC Defendants’ argument that there should not be antitrust standing where the panel members were mere sellers. The case law that the OTC Defendants cited to support that argument concerned the liability of agents and brokers for state-law breach of contract and unjust enrichment. Since the common law requirement of a contractual or quasi-contractual relationship is not relevant to the question of who is the proper plaintiff to enforce antitrust laws, according to the OTC Plaintiffs, those cases are inapplicable.

The OTC Plaintiffs also contend that the direct purchaser rule under Illinois Brick is inapplicable, since that rule applies to fixed-priced goods, so as to prevent duplicative recovery by upstream and downstream purchases of the same good. Since class members do not ever receive the same suppressed interest payment, the rule does not apply to financial benchmark-fixing cases. Moreover the “practical considerations of double recovery, complex apportionment, and over-deterrence are not present here as they are in Illinois Brick.

Finally, the OTC Plaintiffs argued that their antitrust claims should not be dismissed while material factual disputes are pending. The motion raises issues as to the banks’ internal structure, the issuance of LIBOR swaps and bonds, and the sharing of revenues. Discovery thus far has been limited, according to the OTC Plaintiffs. They argue that they should be allowed to take further discovery on the aforementioned topics before their claims are dismissed.

Remainder of Briefing Schedule

Under the current briefing schedule, the OTC Defendants’ replies are due August 24, 2018. Stay tuned to this blog, as we will be sure to inform you as to any new development from the OTC Defendants’ reply.

This post was written by John F. Whelan.

We welcome your feedback. If you have questions or comments about this post, please e-mail John M. Lundin, the Manipulation Monitor’s editor, at or John F. Whelan at or call John Lundin or John Whelan at (212) 344-5400.

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Posted: August 13, 2018

Stock Loan Lowdown: Third Time Through the Order

Welcome back, followers, friends and fellow antitrust fans, to this third installment of the Stock Loan Lowdown. This time around, we examine the full-blown fortress forged by our persistent plaintiffs in response to the defendants frighteningly (or frustratingly?) far-reaching motion to dismiss. If you’re new around here and wondering just what that motion said, who the parties are, or why these soporific sentences contain such frequent forays in to the fertile forests of alliteration—feel free to ferret out former posts on the first few fields by clicking here for the who, and here for the what.

Plaintiffs, understandably, had a lot of ground to cover in their opposition, and did so admirably. Their brief starts with a review of group boycotts and the Rule 8 pleading standard. Specifically, Plaintiffs posit that the antitrust claim they made is a “classic example” of a group boycott, of the type long recognized by courts as unlawful per se.” More to the point, they accuse the Prime Broker Defendants of “ignoring” the Second Circuit’s holding in Anderson News, a case which found the joint decision of a group of publishers and distributors boycott certain magazine wholesalers—each of whom has attempted to charge publishers a per-issue fee to cover the cost of collecting and disposing of unsold magazines—to be a per se violation justifying reversal of the lower court’s dismissal. Both Anderson News and their own case, Plaintiffs insist, are illustrations of the “well-recognized principal” that boycotts involving horizontal agreements among direct competitors are illegal per se.

Plaintiffs use the section on Rule 8 not only to address the general pleading standard—no heightened pleading standard exists, and while plaintiffs must plausibly allege an unlawful agreement, plausibility must be judged by reading the complaint as a whole, and may be alleged through direct or circumstantial evidence—but also to point out that “only facts that actually appear in the Complaint should be taken as true,” and, as such, extrinsic material submitted by Defendants should not be considered.

This is Plausible! The Direct and Circumstantial Evidence Alleged

The next two sections of the brief focus largely on plausibility: how the complaint alleged direct and circumstantial evidence of agreement, followed by an examination of why defendant’s arguments against plausibility fail. With respect to direct evidence, Plaintiffs point to statements, made by named executives of the Defendant organizations, quoted in the complaint, and claim that theirs is “the rare case where Plaintiffs have uncovered direct evidence of an illegal agreement.” In one such example, Plaintiffs highlight an admission by the Prime Broker Defendants, in which an executive stated that they had reached a “general agreement” that “industry advances,” as reflected by AQS, SL-x, and Data Explorers, should only “be achieved from within EquiLend.” The antitrust laws, Plaintiffs go on to say, “do not permit any group of competitors . . . to anoint themselves arbiters of whether innovation can occur in a market.”

Beyond this and other similar examples of direct evidence, Plaintiffs insist that “the Complaint also painstakingly explains how Defendants engaged in parallel and other highly probative circumstantial conduct as they lived up to their ‘general agreement.’” One element of this circumstantial evidence takes the form of individual, yet identical, demands by various Prime Broker Defendants to AQS that AQS become a “broker-only platform”: each insisted that they would not participate on the platform unless AQS barred lenders and borrowers from trading directly. Plaintiffs also push back on Defendants’ conclusion that this allegation is conclusory, despite not quoting precise language from the meetings, on the grounds that it alleges specific content of communications by specific Defendants. Plaintiffs further point to In re Credit Default Swaps Antitrust Litigation (“CDS”), a case in which dealer defendants conspired to block a trading platform from entering the CDS market, and argue that Judge Cote there found that similar “indirect” allegations to those pled here—such as communications made “under the auspices of board or committee meetings”—were sufficient to plausible support an inference of conspiracy.

To support the examples of indirect or circumstantial evidence, Plaintiffs further point to numerous “plus factors,” but take care to point out that such plus factors are only necessary “when a conspiracy claim rests solely on inferences drawn from allegations of parallel behavior”—not a situation Plaintiffs believe to apply to them, given their allegations of direct evidence. The plus factors they do cite, however, cover: (1) the high level at which the identified communications took place; (2) the common motive to conspire; and (3) an assertion that, absent the a conspiracy, it would have been against the self-interest of the individual defendants to boycott the new platforms—they would have been at risk of being left behind a market shifting in response to strong demand.

No, Really – This is Plausible! Defendants’ Implausibility Arguments Fail

In their opening brief, Defendants presented an assortment of arguments for why the group boycott alleged was, supposedly, implausible. Plaintiffs devote a portion of their brief to undercutting each of these arguments in turn. First, as regards the nine-year length of the conspiracy: Plaintiffs note Defendant’s failure to identify any case holding that conspiracies have a maximum time limit, and further drop a cite to a case finding it plausible that some of the very same defendants engaged in a “long-running conspiracy” lasting over a decade. The members of the conspiracy are similarly plausible, despite the presence in the market of, as defendant note, “dozens of other prime brokers,” because the six prime brokers named held more than three quarters of the total market share, and thus possessed not small amount of clout. Moreover, the Prime Broker Defendants together controlled a sufficient share of the industry that those other brokers alone could not provide sufficient liquidity. The Defendants had further argued that the very goals of the conspiracy were implausible, as the stock loan market was fundamentally unsuited for anonymous exchange, and that no market demand existed. In response, Plaintiffs note that, contrary to Defendant’s insistence that the identity of the lender is critical to assess the risk of a stock loan, most borrowers in the current OTC market do not demand to know the identity of lenders—nor would such information give any definite information as to the lender’s future intentions for the stock. Moreover, for those that did concern themselves with such details, anonymity on both the AQS and SL-x platforms was optional, not mandatory. More generally, Plaintiffs assert, if the market was so ill-suited to anonymous trading as Defendants contend, how did AQS attract the support of some of the largest lenders and borrowers of stock, or the oldest American venture capital fund, or one of the largest exchanges? Similarly, why was Quadriserve’s first anonymous trading offering so immediately popular with borrowers and lenders? Or why would Bank of America have initially provided so much support? Good questions, guys.

They’re a Team, but . . . [Addressing Group Pleading Contentions]

Plaintiffs counter Defendant’s allegation of impermissible group pleading first by pointing out the array of Defendant-specific detail in the Complaint—and further, by noting that the court in CDS rejected similar arguments where the complaint alleged the “conspiratorial participation of each defendant and listed the representatives attending various meetings at which the attendees were alleged to have colluded.”

With respect to Defendant’s argument that allegations against various members of the corporate families were insufficient, Plaintiffs point out that this type of pleading is “routinely allowed” at the corporate family level. This is particularly true, they claim, where the named employees have held themselves out as representing the interest of the corporate family as a whole.

Rule of Reason is not the Rule of this Road

In response to Defendant’s argument that the Court should apply the “rule of reason” to allegations concerning EquiLend, Plaintiffs again argue that per se treatment is most appropriate because the question of liability must be made by looking at the type claim as a whole, and not on individual allegations taken in isolation of one another. A per se claim, Plaintiffs, by way of the Second Circuit, explain, “does not lose that character simply because some individual allegations concern joint venture conduct.” Allegations involving Equilent, therefore, should not be taken in isolation, but considered as part of the whole.

Moreover, the Complaint does not, as Defendants suggest, center on actions taken by EquiLend, but on agreements Defendants made to restrain their actions in the stock loan market itself, outside of the joint venture. This makes the case fundamentally different, Plaintiffs explain, from Texaco, relied on the Defendants, which found that two companies which participated in a market only through a joint venture investment, and not also independently. The Prime Broker Defendants did not act as a “single firm” in the stock loan market, the way the Texaco defendants did, but instead remained horizontal competitors (or is that “competitors”?) and separate economic actors. With respect to the allegations concerning DataLend, which the Complaint alleges was created to “kill” DataExplorers by offering just enough data to undermine that entity, while preventing dissemination of real-time data in the market—a development Defendants knew would lead to pricing compression and reductions in their fees. Because each Prime Broker Defendant negotiated distribution agreements with DataLend in parallel, the actions constituted, according to Plaintiffs “plainly unlawful, naked restraint” of competition in the stock loan market.

And even if the court were to decide that the claims warranted some scrutiny beyond per se, Plaintiffs posit that such scrutiny would involve, at most, a “quick look” or truncated rule of reason analysis—a standard, Plaintiffs insist, they would easily satisfy. To that end, Plaintiffs point to an array of “truncation” cases, including one in which the deciding court took guidance from Moore to find that the rule of reason could sometimes, like the good St. Nick, “be applied in the twinkling of an eye.” (And for those of you unfamiliar with the reference, please note that those twinkling eyes were further accompanied by dimples—how merry!—and a nose like a cherry, neither of which have yet made it into an antitrust-related holding.)

Here we Stand: Plaintiffs have Antitrust Standing

Of the four “efficient enforcer” standards, Defendants argue that Plaintiffs fails to meet one criteria: speculativeness. Plaintiffs respond, however, that there is nothing speculative about the injuries suffered by borrowers and lenders in the stock loan market: they were deprived of more efficient, competitive, and transparent trading options, and that deprivation was a direct result of Defendants boycott. The goal of the conspiracy was to maintain inflated spreads, and the result—higher prices paid by borrowers and lenders—was the not just the logical and foreseeable result of Defendants actions, but, indeed, their intent. And while every antitrust lawsuit demands some degree of speculation—all plaintiffs must present an account of how the situation would have unfolded “but for” the wrongful conduct—that does not mean that those effects cannot be sufficiently estimated and measured. Indeed, Plaintiffs point out that AQS had in conducted analyses to quantify the economic benefits that borrowers and lenders would enjoy by way of its new platform.

No Time Outs Here: Plaintiff’s Claims are Timely

Plaintiffs can recover for antitrust injuries occurring prior to August 16, 2013, they argue, because the complaint readily satisfies the pleading standard for tolling. First, concealment may be pled where the wrongful behavior was of a self-concealing nature. As the CDS court has previously found, “[a] group boycott of exchange trading has the characteristics of other types of conspiracies that have been held to be self-concealing.” The next factor requires that Plaintiffs adequately plead their ignorance of the conspiracy; because key parts of Defendant’s misconduct, such as the secret meetings, were non-public facts uncovered by counsel during a thorough investigation, Plaintiffs could not have acquired knowledge sufficient to put them on notice. As for the 2009 news article cited by Defendants, Plaintiffs brush away: it contained no discussion of a boycott, nor, in almost 9000 words, more than a single passing mention of EquiLend. It provided no specific facts related to the conduct alleged by the complaint. Plaintiffs further point out that all of Defendant’s assertions regarding timeliness are highly fact specific, determination of which would require the development of an appropriate factual record.

EquiLend’s Participation

In response to the EquiLend Defendant’s motion, Plaintiffs focus on two arguments: the complaint plausibly alleged participation by EquiLend in a per se illegal conspiracy, and that specific personal jurisdiction does exist over EquiLend Europe.

Plaintiff’s assertions regarding EquiLend’s participation closely track behavior discussed in the main brief, so I’ll spend little time here on the topic. Let it suffice to say that EquiLend’s anticompetitive actions were illustrated through, among other things, the “general agreement” with the Prime Broker Defendants to accomplish all industry advances through that entity, the result of which was actions by EquiLend, like their agreement not to release valuable pricing data, that were clearly anti-competitive and thus, as per Plaintiffs, “more than sufficient to establish EquiLend’s participation in a per se illegal conspiracy.”

Shifting to the question of jurisdiction: EquiLend Europe is subject to jurisdiction under any one of three well-established doctrines: the “effects” test, the “conspiracy theory” of jurisdiction, and the “alter ego” doctrine. First, Plaintiffs note that the complaint details statements by individuals who sat on the board of EquiLend Europe—and who did not also sit on the board of the U.S. parent entity—in which those individuals invoked their involvement with EquiLend in a manner that suggests involvement in the conspiracy’s collective strategy.

Under the “effects” test, acts taking place as part of a conspiracy meet the test where those acts took place. Because EquiLend Europe’s conspiracy concerned the U.S. stock lending market, and caused harm to U.S. investors, the test has been met. The “conspiracy theory” test is met where a conspiracy existed, the defendant participated in that conspiracy, and the co-conspirator’s overt acts had sufficient contacts with the state to subject that co-conspirator to jurisdiction. Here, Plaintiffs argue, the conspiracy is well-pled, it is undeniable that acts of the co-conspirators took place in the state—for example, those executive dinners in New York—and those contacts can thus be imputed to EquiLend Europe. Third, the “alter ego” doctrine also allows for jurisdiction: EquiLend Europe has no separate website, CED, or other “C-suite” officers of it’s own, and Mr. Brian Lamb is responsible for global operations of not just EquiLend, but, to cite the EquiLend website, it’s affiliates as well. There is ample evidence, Plaintiffs argue, to pierce the corporate veil in these circumstances.


And that, my friends, concludes this installation of the Stock Loan Lowdown. You know there’s one more set of briefs out there, though, so watch this space for our review of the reply.

This post was written by Alexandra M.C. Douglas.

We welcome your feedback. If you have questions or comments about this post, please e-mail John M. Lundin, the Manipulation Monitor’s editor, at or Alexandra M.C. Douglas at or call John or Alexandra at (212) 344-5400.

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Posted: August 6, 2018

SEF Scuttling? Alleged Manipulation of the Interest Rate Swap Market through Torpedoing of All-To-All Platforms and SEF Marketplaces

Interest rate swaps (IRS) are a frequently traded instruments known for their ability to reduce or increase one’s exposure to changes in interest rates. Buy-side funds and firms historically have been reliant on the major sell-side broker-dealer banks like Bank of America to purchase and sell IRS. However according to a number of actions MDL’d to Interest Rate Swaps Antitrust Litigation, No. 1:16-md-02704 (SDNY) (“IRS Antitrust Litigation”), in the late 2000s this was poised to change. New platforms, and swap execution facilities (“SEFs”) supposedly would have opened up “all to all” trading, in which buy-side firms could sell to other buy-side firms, breaking the broker dealers’ monopoly on the sale of swaps. According to the Plaintiffs, Defendants, the major buy-side banks, sabotaged this by preventing the creation of these all-to-all trading platforms, and otherwise conspiring to restrain their creation and growth. Plaintiffs allege that because of Defendants’ actions, the IRS market was less competitive and transparent, artificially preventing the narrowing of bid/ask spreads and thereby damaging the buy-side firms, when they purchased and liquidated their IRS positions at less favorable terms. In this post, we focus on the facts alleged in IRS Antitrust Litigation. In an upcoming posts we will unpack the procedural and factual developments to date.

What are IRS?

IRS essentially are bets that that allow investors to change their exposure to certain changes in interest rates without having to exchange actual underlying instruments. IRS are agreements by two parties to trade the interest cash flows from a particular interest bearing instruments, like bonds, without trading the instruments themselves. Plain vanilla swaps for instance trade fixed interest rate cash flows for those of an instrument with a floating interest rate, for instance one tied to an industry benchmark such as LIBOR.

How are IRS Traded?

Historically IRS were non-standardized instruments sold “over the counter” (“OTC”) in one-off “bespoke,” or specially tailored, transactions with the dealer banks like Bank of America, which would sell swaps to buy-side investors. Buy-side funds and firms would have to call for quotes from the dealer banks. This process was opaque in that it did not provide very much information to the buy-side funds about the actual market price of their purchase. However, in the last few decades, IRS contracts have become more and more standardized in their terms and form. Additionally, technology has made it so that anonymous, real time electronic quoting could become ubiquitous.

Overview of the Alleged Collusion

However, according to the allegations of Plaintiffs, buy-side funds such as pension and retirement funds, and asset management companies, in IRS Antitrust Litigation, while a number of platforms have emerged in the last decade or so, those platforms continue to use a “request for quote” (“RFQ”) protocol whereby buy side investors must give up their identity, and request quotes only from several dealer banks and no one else. Meanwhile the Defendants, large dealer banks including Bank of America, Barclays, BNP Paribas, and Credit Suisse, among others, are able to use their own interdealer bank (“IDB”) platforms that are anonymous, all-to-all (at least for the dealer banks who have access to them), and real time, much like exchanges for stocks.

According to Plaintiffs, Defendants have used their heavy hand to prevent the development of truly all-to-all platforms like the IDB platforms, stifling the growth of these platforms and relegating buy-side firms to the use of RFQ platforms in order to perpetuate an “OTC-like” state where buy-side firms are forced to go through the dealer banks, which could use the opaqueness of the market to artificially widen the bid-ask spread, the spread between the purchase and sale price of a particular position on a particular IRS instrument.

Plaintiffs allege Defendants accomplished this by backing the creation of Tradeweb, which adopted the RFQ system, then putting together investment groups, which collaborated with one another to prevent Tradeweb from implementing “all to all” trading, by installing themselves on Tradeweb’s boards and committees, and otherwise by preventing the IDB platforms like GFI Group by threatening to pull their business from the platforms, and through negotiating with entities like ICAP.

Moreover, while Title VII Dodd–Frank Wall Street Reform and Consumer Protection Act sought to forward centrally cleared and all-to-all purchased/sold IRS through SEFs, according to Plaintiffs, the dealer defendants have prevented central clearing on SEFs so that they could continue to control the clearing infrastructure of IRS, forcing buy-side firms to purchase through them. They did this by taking control of IRS clearinghouses like SwapClear through bankrolling their formation, and barring access to the clearinghouses without the payment of a “king’s ransom” to the clearinghouse’s default fund. Having barred access to the clearinghouses, dealer defendants’ allegedly forced the buy-side firms to trade on the RFQ platforms in order to be able to clear. Moreover, their boycotting and threatening of other SEF’s “smothered these entities in their crib” so to speak, preventing these entities from growing early in their formation, and preventing any means for the buy-side firms to break the Dealer’s monopoly.

According to the plaintiffs, because the buy-side Plaintiffs are forced to purchase on the artificial “OTC-like” RFQ platforms, they cannot break the monopoly and must continue to enter into IRS agreements at artificial and unfavorable terms.


Plaintiffs seek damages, restitution, injunctions and declaratory relief under Section 1 of the Sherman Act, 15 U.S.C. § 1 and their claim for Unjust Enrichment.

This post was written by Lee J. Rubin.

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Posted: July 30, 2018

Mexican Government Bond Market Manipulation Manipulation

In our May 17, 2018, post, we alerted you to several lawsuits filed in the Southern District of New York alleging manipulation of the market for Mexican government bonds, and noted that one case had already moved to consolidate with other actions. Since then, on June 18, 2018, the Court granted motions by plaintiffs in all six of the following cases to consolidate and be granted leave to file a consolidated amended complaint: Oklahoma Firefighters Pension and Retirement System et al. v. Banco Santander S.A. et al., 18-cv-02830 (S.D.N.Y.); Manhattan and Bronx Surface Transit Operating Authority et al. v. Banco Santander S.A. et al., 18-cv-03985 (S.D.N.Y.); Boston Retirement System v. Banco Santander S.A., et. al., 18-cv-04294 (S.D.N.Y.); Southeastern Pennsylvania Transportation Authority v. Banco Santander S.A. et al., 18-cv-0440 (S.D.N.Y.), United Food and Commercial Workers Union and Participating Food Industry Employers Tri-State Pension Fund v. Banco Bilbao Vizcaya Argentaria S.A. et al., 18-cv-04402 (S.D.N.Y.), and Government Employees’ Retirement System of the Virgin Islands v. Banco Santander S.A. et al., 18-cv-4673 (S.D.N.Y.).

The Plaintiffs in those consolidated actions, now known as In re Mexican Government Bonds Antitrust Litigation, 18-cv-02830 (In re MGB), filed their Consolidated Amended Class Action Complaint (the “Complaint”), available here, on July 18, 2018. In this post, we provide an overview of the alleged facts in this newly filed complaint.

How the Mexican Government Bond Market Works

A Mexican Government Bond (“MGB”) is a debt security issued by the Mexican government (the “Government”) at regularly scheduled weekly auctions. There are four types of MGBs, each of which differ from each other in how interest is paid to the holder: Federal Treasury Certificates or “CETES” (short term bonds which do not pay interest to the holder until the bonds mature); Mexican Federal Government Development Bonds or “BONOS” (fixed-rate bonds with semi-annual coupon payments that have a maturity greater than one year); UDIBONOS (inflation-hedged coupon bonds that pays interest at a fixed rate); and Bondes D (issued with any maturity with a multiple of 28 days and pays a coupon every month).

The Plaintiffs present the MGB market as a three-tiered pyramid: the Government, as issuer, sits at the top, the Defendant “market maker” banks in the middle, and the consumers at the bottom. Not just anyone can bid in the Government’s weekly auctions. That privilege is reserved for participants in the Bank of Mexico’s “Market Maker Program,” who are also the Defendant Banks in these actions. In order to become market makers, the Defendants have to commit to bidding on the lower of (a) 20% of the amount of MGBs at each weekly auction or (b) 1 divided by the number of market makers for a particular type of MGB. The Defendants are also required to present “two-way quotes” to consumers on the secondary market: a quote to sell MGBs and a quote to buy them from consumers. Trades with consumers usually happened “over-the-counter.” It is from the difference between the price paid for the MGBs by the market makers at the Government’s auction and the price the MGBs are sold to consumers that the market makers make their profit.

Most importantly, market makers are not allowed to disclose their bids to each other prior to auction, and must offer competitive rates, and refrain from colluding.

The Alleged Collusion

Plaintiffs allege that the defendants conspired to rig MGB prices in at least three ways: (1) Defendants shared information with each other and coordinated bids submitted at the Government’s weekly auction, so as to fix the prices paid for bonds and the amount of bonds allocated to each bank; (2) Defendants then agreed to sell the bonds at fixed, artificially high prices to consumers on the secondary market; and (3) after the MGBs were initially offered on the secondary market, Defendants agreed to artificially widen the “bid-ask spread,” the difference between the bid price that a Defendant would agree to buy a particular type of MGB from a consumer and what a Defendants would agree to sell that same type of MGB for, as listed in the “two-way quote.”

In support of these allegations, Plaintiffs note an April 2017 announcement by Mexican regulator Comisión Federal de Competencia Económica (“COFECE”) that it had uncovered evidence of price-fixing and collusion in the MGB market. Plaintiffs cite public reports for the proposition that the conduct being investigated by COFECE involves both the Government’s auctions and the consumer market, and goes back to October 2006. Not only have the Defendants since acknowledged that they are targets of the COFECE investigation, but Plaintiffs plead that public reports have indicated that an unidentified Defendant has applied for and has been granted leniency under the Government’s cartel leniency program. This is significant because the terms of the program require that the applicant show to the Government that it has participated in a cartel, not just that it engaged in unilateral illegal conduct.

Besides the COFECE’s investigation and related public reports, Plaintiffs plead that various economic evidence shows support for collusion. Most of this economic evidence relates to comparison of bid activity between before the COFECE’s investigation was announced (“Pre-Announcement Period”) and after the COFECE investigation was announced. For example, the “bid dispersion” or difference between the highest and lowest bids at the Government’s MGB auctions for all BONOS increased 12.24% after the COFECE’s investigation was announced. Since a higher bid dispersion is consistent with more uncertainty in the market, it supports the inference that there was collusion prior to the investigation being announced. Plaintiffs assert that an adjustment of that comparison based on the U.S. Treasury Note Volatility Index found an even greater bid dispersion; Plaintiffs contend that this shows that the bid dispersion was not caused by macroeconomic factors.

Plaintiffs state that they found that the percentage of bonds received by each Defendant at the Government’s MGB auctions relative to what was bid for (known as the “fill rate”) was greater during the Pre-Announcement Period than the Post-Announcement Period. Plaintiffs allege that this difference between the Pre and Post-Announcement periods reflects the coordination of bids amongst Defendants. A comparison by Plaintiffs between the fill rates of the Defendants with non-market makers such as Mexican state-run pension funds shows less statistical volatility (lack of certainty) among the Defendants, which also supports collusion.

To support the allegation that Defendants agreed to fix the bid-ask spread, Plaintiffs compared the bid-ask spread between the Pre-Announcement and Post-Announcement Period. Plaintiffs found that the bid-ask spreads in the Pre-Announcement periods were 29% to 50% wider than in the Post-Announcement Period. According to Plaintiffs, this reflects collusion to quote wider spreads in order to make higher profits.

Besides these and other economic evidence not covered in this post, the Complaint also detailed how there was a “revolving door” of traders between the Defendants; many MGB traders previously worked together in the same bank, before moving on to work for another market maker. Plaintiff plead that these prior connections allow for closer relationships and more open lines of communication, which supports the inference of a conspiracy.

Finally, Plaintiffs detail admissions from the Defendants and findings from various regulatory authorities showing that the same Defendant banks have colluded to fix prices in other markets, such as the U.S. Dollar Libor benchmark rate. This evinces, Plaintiffs argue, a “practice [by defendants] of conspiring to increase profits by fixing prices for their benefit and at the expense of consumers.”

The Parties and Alleged Class

Defendants Santander Mexico, BBVA-Bancomer, JPMorgan Mexico, HSBC Mexico, Barclays Mexico, Citibanamex, Bank of America Mexico, Deutsche Bank Mexico, Banco Credit Suisse (Mexico), S.A., and ING Bank Mexico S.A. are alleged to be the market makers during proposed Class Period. Their relevant parent entities and certain other affiliates, including Banco Santander, S.A., BBVA S.A., JPMorgan Chase & Co., HSBC Holdings PLC, Barclays PLC, Citigroup Inc., Bank of America Corporation, Deutsche Bank Defendants, Credit Suisse Group AG, and ING Bank, N.V. are also defendants.

Plaintiffs Oklahoma Firefighters Pension and Retirement System (“OFPRS”), Electrical Workers Pension Fund Local 103, I.B.E.W (“EWPFL”), Manhattan and Bronx Surface Transit Operating Authority (“MaBSTOA”), MTA Defined Benefit Pension Plan Master Trust (“MTADBPPMT”), Boston Retirement System (“BRS”), Southeastern Pennsylvania Transportation Authority (“SEPTA”), Government Employees’ Retirement System of the Virgin Islands (“GERS”), United Food and Commercial Workers Union and Participating Food Industry Employers Tri-State Pension Fund (“UFCW Tri-State”) all invested in MGB and collectively traded MGBs with the Defendants, and allege to have suffered monetary losses from being “overcharged or underpaid in these transactions as a direct result of Defendants’ conspiracy to fix MGB prices in the United States.”

Class Allegations

The Complaint defines the proposed Class as follows:

All persons that entered into an MGB transaction between at least January 1, 2006, and April 19, 2017 (the “Class Period”), where such persons were either domiciled in the United States or its territories or, if domiciled outside the United States or its territories, transacted in the United States or its territories.

Excluded from the Class are Defendants and their employees, agents, affiliates, parents, subsidiaries and co-conspirators, whether or not named in this Complaint, and the United States government.


Plaintiffs seek damages (including treble damages), restitution, injunctions and declaratory relief under Section 1 of the Sherman Act, 15 U.S.C. § 1, Sections 4 and 16 of the Clayton Act under 15 U.S.C. §§ 15(a), and claims for unjust enrichment.

Motion to Dismiss Briefing

The Court and the parties have agreed that the date by which Defendants have to move against, answer or otherwise respond to the Complaint is September 17, 2018. Please stay tuned to this blog for further developments related to that briefing.

This post was written by John F. Whelan.

We welcome your feedback. If you have questions or comments about this post, please e-mail John M. Lundin, the Manipulation Monitor’s editor, at or John F. Whelan at or call John Lundin or John Whelan at (212) 344-5400.

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