Posted: July 1, 2020

Plaintiffs in Mexican Government Bond Antitrust Case Settle With Two Defendant Groups; Get Defendants’ Evidence and Cooperation

In our October 22, 2019, post, we alerted you to a letter to the court by the Plaintiffs in consolidated actions, now known as In re Mexican Government Bonds Antitrust Litigation, 18-cv-02830 (In re MGB), requesting 45 days to file an amended complaint. Previously, Plaintiffs’ Consolidated Amended Complaint, which alleged a conspiracy among several banks to inflate the price of Mexican government bonds, was found by Judge Oetken in a September 30, 2019, decision to lack individualized allegations as to each defendant, and instead treated all defendants as one by relying on impermissible “group pleading.” Judge Oetken accordingly dismissed the Consolidated Amended Complaint. Plaintiffs’ request for leave to file an amended complaint revealed an agreement in principle with two Defendants to provide Plaintiffs with information, including chatroom transcripts, a summary from Comisión Federal de Competencia Económica’(“COFECE “) of the results of its investigation into Defendants, and transaction-level data. Plaintiffs argued that this information would allow them to plead particular allegations as to each Defendant. Plaintiffs’ letter did not identify which Defendants had agreed to give this information.

On June 1, 2020, in filings related to Plaintiffs’ motion to preliminarily approve Class Settlements, Plaintiffs revealed that the information came from Defendants Barclays PLC, Barclays Bank PLC, Barclays Capital Inc., Barclays Capital Securities Limited, Barclays Bank México, S.A., Institución de Banca Múltiple, Grupo Financiero Barclays México, and Grupo Financiero Barclays México, S.A. de C.V. (collectively, “Barclays”) and Defendants JPMorgan Chase & Co., J.P. Morgan Broker-Dealer Holdings Inc., J.P. Morgan Securities LLC, JPMorgan Chase Bank, National Association, Banco J.P. Morgan, S.A. Institución de Banca Múltiple, J.P. Morgan Grupo Financiero, and J.P. Morgan Securities PLC (collectively, “JPMorgan”).

Plaintiffs’ motion seeks to preliminarily approve class settlements, pursuant to Rule 23 of the Federal Rules of Civil Procedure, with payments of $5.7 million from Barclays and $15 million from JPMorgan. Rule 23(e)(1)(B)(2) requires that the class settlement be preliminarily approved “only after a hearing and only on finding that it is fair, reasonable, and adequate after considering . . . “ whether, among other things, “ . . . (A) the class representatives and class counsel have adequately represented the class; (B) the proposal was negotiated at arm’s length; (C) the relief provided for the class is adequate . . .” In its argument as to why the proposed settlement was negotiated at arm’s length, Plaintiffs detail that the information provided by JPMorgan and Barclays was provided as a part of settlement discussions in which each of the two Defendant groups made multiple proffers to Defendants and provided thousands of pages of documents. Plaintiffs’ settlement discussions with JPMorgan and Barclays began in March 2019 and September 2019, respectively. After Plaintiffs’ Consolidated Amended Complaint was dismissed, settlement discussions with each Defendant group accelerated, and resulted in respective binding term sheets with each Defendant group that provided for prompt production of initial cooperation materials before Plaintiffs’ deadline to inform the Court that it intended to amend their Consolidated Amended Complaint. Settlements with each Defendant were finalized in March 2020 with the execution of a separate Stipulation and Agreement of Settlement with each Defendant group.

JPMorgan and Barclays also have an ongoing obligation to provide information. According to the settlement agreements appended to Plaintiffs’ counsel’s affirmation (here and here), Defendants are to provide “[a]dditional reasonably available documents or information from the Class Period relevant to the allegations made in the Action that Plaintiffs may request and Settling Defendants may agree to provide.” JPMorgan and Barclays are not to “unreasonably” withhold agreements to provide information. JPMorgan and Barclays are also obligated to make “reasonable efforts” to make fact witnesses under their control available.

Besides citing the knowledge gained from the information acquired from Barclays and JPMorgan, Plaintiffs also cite Plaintiffs’ counsel’s experience litigating complex anti-trust class actions, the risk of prosecuting the claims (highlighted by the Court’s dismissal of the Consolidated Amended Complaint), the adequate notice provisions to the Class (mailed notices sent to the Mexican Government Bond Transaction counterparties identified by JPMorgan and Barclays), and the alignment of interest of Plaintiffs to the other members of the proposed Settlement Class (since Plaintiffs purchased Mexican Government Bonds during the Class Period, Plaintiffs were injured in the same way as other Class members), among other things, as to why the requirements of Rule 23 have been satisfied, and the settlement should be approved.

The Court has not yet issued Plaintiffs’ requested order approving of the plan to give notice of the proposed settlement to the Class and setting a date for a hearing to consider the fairness, reasonableness, and adequacy of the settlement.

In other news related to In re MGB, the motion to dismiss Plaintiffs’ Second Consolidated Amended Class Action Complaint (which incorporated the information provided to Plaintiffs from Barclays and JPMorgan) made by the other Defendants (besides JPMorgan and Barclays) has been fully briefed. We will let you know when the Court issues a ruling on that motion.

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 jlundin@schlamstone.com or John F. Whelan at jwhelan@schlamstone.com or call John Lundin or John Whelan at (212) 344-5400.

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