Posted: October 1, 2020

Preliminary Approval Given For SSA Bond Settlement Allocation Plan

This is the latest in a series of posts about In re SSA Bonds Antitrust Litig., 16-cv-3711 (ER).

The SSA Bonds action concerns allegations that secondary-market dealers for SSA bonds colluded to manipulate prices. As previously reported in this blog, Bank of America, Deutsche Bank, and HSBC settled settled for a combined $95.5 million, and the court subsequently dismissed all claims against the remaining foreign and domestic defendants, including Barclays, Citgroup, RBC, Credit Suisse, Credit Agricole, and TD Bank. This post focuses on aspects of the plaintiffs’ plan to allocate the settlement funds, supported in motion papers, which was given preliminary approval by Judge Edgardo Ramos on July 15, 2020.

Notably, the allocation plan does not distinguish between plaintiffs who had claims against Bank of America, Deutsche Bank, or HSBC based upon the amount of each settlement; indeed, the allocation plan provides for distributions to all class members, even those who only transacted with defendants who have been dismissed. (MOL p. 14; Proposed Plan par. 2-3.) The plan divides up the funds into two pools, Pool A for U.S. dollar transactions, and Pool B for foreign-currency transactions. Pool B will receive $5 million of the settlement funds, with the entire remainder (currently in excess of $90 million) going into Pool A. (Proposed Plan par. 6-8.) This split is apparently not based upon the actual losses suffered or the total amount of transactions in each group, but rather upon plaintiffs’ assertion that the “larger allocation of the Net Settlement Fund to Pool A reflects the fact that the core conspiracy alleged in the Complaint was focused on SSA Bonds denominated in U.S. dollars, and that if the case were litigated at trial, Plaintiffs’ recovery would be focused on U.S. dollar-denominated bonds.” (MOL p. 15.) Then, “distributions from each pool will be calculated on a pro-rata basis . . . . [so] distributions will be made proportionally to each member of the Settlement Classes based on its shares of the total notional transaction amounts for each pool, without respect to the specific type (e.g., issuer or maturity date) of the SSA Bonds traded.” (MOL p. 16.)

Thus, as plaintiffs’ counsel explain “the proposed Plan of Allocation treats all bonds within each pool the same.” (Id.) The only exception is that claims based upon “transactions executed prior to 2009 or after 2015 will be subject to a discount multiplier of 20%,” (MOL p. 15), meaning that they will be devalued by 80% in comparison to the transactions that took place between 2009 and 2015. (Proposed Plan par. 9-11.) Similar to the different allocations between Groups A and B, this distinction rests upon plaintiffs’ assertion that “were it to proceed to trial, this case, and thus recoveries, would focus on the core conspiracy years of 2009 through 2015 alleged in the complaint.” (MOL p. 15.)

The next step is for the settling defendants to provide plaintiffs with counterparty contact information so that the notice process can begin (Order par. 8-10), but review of the docket suggests that Deutsche Bank and HSBC’s counterparty contact information has not yet been produced in its entirety. (No such notification process appears to be in place for the counterparties who transacted with other defendants, even though they are entitled to present claims. Plaintiffs’ only possible comment on this issue is their statement that the “name and address information Plaintiffs have received from Bank of America, combined with the information Deutsche Bank and HSBC will produce, is sufficient to identify the potential members of the Settlement Classes.” (MOL p. 7.))

This blog will provide further updates on the SSA Bond litigation as the settlement process continues and as any appeals proceed before the Second Circuit.

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 Niall D. O’Murchadha, the author of this post, at or call John or Niall at (212) 344-5400.

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