Pension Funds Sue Six Banks, Claiming Stock-Lending Abuses
August 17 2017 - 1:37PM
Dow Jones News
By Katy Burne
Three U.S. pension funds sued six major global banks, saying
they conspired to block competition in the stock-lending
market.
The plaintiffs -- Iowa Public Employees' Retirement System,
Orange County Employees Retirement System and Sonoma County
Employees' Retirement System -- allege in a complaint seeking
class-action status that the banks have been acting together since
2009. The suit was filed Wednesday in federal district court for
the Southern District of New York.
The lawsuit is the latest effort by pension-fund plaintiffs and
private lawyers to extract penalties from banks for alleged
wrongdoing including anticompetitive actions.
The banks named as defendants in the lawsuit are Bank of America
Corp., Credit Suisse Group AG, Goldman Sachs Group Inc., J.P.
Morgan Chase & Co., Morgan Stanley & Co. and UBS Group AG.
Representatives for Credit Suisse, Goldman, J.P. Morgan and Morgan
Stanley declined to comment. The other banks didn't immediately
return requests for comment.
New York-based stock-lending platform EquiLend, which matches up
banks and other firms that want to borrow securities with those
seeking to lend them, was also named as a defendant. EquiLend is
owned by banks including the six other defendants, according to its
website. Equilend didn't immediately comment.
In stock-lending transactions, firms lend out their shares to
borrowers for a fee, often using agents as middlemen. There are
some $1.72 trillion of shares on loan at any one time, the suit
says.
Private lawsuits have already drawn billions of dollars in
settlements over the alleged manipulation by banks of
foreign-exchange, interest-rate, commodity and off-exchange
derivatives markets. Twelve banks and two industry groups in 2015
agreed to pay $1.87 billion to settle accusations that they rigged
the credit derivatives markets.
In 2013, Iowa's pension fund was the lead plaintiff in a
class-action lawsuit against Countrywide Financial Corp. and others
over alleged abuses in the packaging and selling of mortgage bonds
that soured in the financial crisis. Defendants agreed to pay $500
million to settle that case.
Those lawsuits were brought under a Democratic administration
widely perceived as more friendly to attempts to rein in banks than
the Trump administration.
Plaintiff lawyers working on the stock-lending lawsuit are Cohen
Milstein Sellers & Toll PLLC and Quinn Emanuel Urquhart &
Sullivan LLP. The firms were also co-lead counsel in a lawsuit
alleging banks manipulated the interest-rate swaps market. That
case is ongoing.
Write to Katy Burne at katy.burne@wsj.com
(END) Dow Jones Newswires
August 17, 2017 13:22 ET (17:22 GMT)
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