Big banks win dismissal of U.S. Treasury rigging litigation

Jonathan Stempel
·2-min read
The logo and seal of the Department of the Treasury is seen inside the new United States embassy building is seen during a press preview near the River Thames in London

By Jonathan Stempel

NEW YORK (Reuters) -A U.S. judge on Wednesday dismissed litigation accusing 10 large banks of conspiring to suppress competition in the now $21.2 trillion market for U.S. Treasury securities.

U.S. District Judge Paul Gardephe in Manhattan ruled in long-running antitrust litigation by 21 pension, retirement and benefit funds, as well as unions, banks, individuals, and companies that traded in Treasuries.

The defendants included Bank of America, Barclays, BNP Paribas, Citigroup, Credit Suisse, Goldman Sachs, JPMorgan Chase, Morgan Stanley, NatWest Group and UBS, as well as trading platform operator Tradeweb Markets.

Traders said the banks, which from 2010 to 2014 handled an estimated 75% of Treasury trades through the Federal Reserve Bank of New York, used chat rooms and other means to swap confidential customer orders and coordinate strategies.

Traders alleged manipulation in the so-called "when-issued" market, or the period between when auction dates are announced and securities are delivered.

They also said seven banks conspired to boycott alternative platforms that offered "anonymous" trading and might help level the playing field.

But in a 53-page decision, Gardephe found no plausible direct evidence of an antitrust conspiracy, and said the plaintiffs' statistical analyses were "no substitute" for evidence of individual or collective wrongdoing.

"Plaintiffs' statistical analyses are at most a 'plus factor,'" he wrote. "But plus factors alone are not sufficient; a plaintiff must also adequately allege parallel conduct. That Plaintiffs have not done."

Gardephe gave the plaintiffs until April 30 to file an amended complaint.

Lawyers for the plaintiffs did not immediately respond to requests for comment.

The litigation began July 2015, shortly after news reports that U.S. Department of Justice was probing possible misconduct by banks in Treasuries.

Earlier probes into manipulation of the Libor interest rate benchmark and foreign currencies resulted in billions of dollars in criminal and civil penalties for banks worldwide.

The case is In re: Treasuries Securities Auction Antitrust Litigation, U.S. District Court, Southern District of New York, No. 15-md-02673.

(Reporting by Jonathan Stempel in New York; Editing by Chris Reese, Alexandra Hudson and Diane Craft)