Bank of America and Deutsche Bank have reached an agreement to pay an aggregated
$65.5 million to reach a settlement with investors regarding an alleged
scheme to manipulate the sovereign, supranational and agency (SSA) bond market.
Bank of America and Deutsche Bank will pay $17 million and $48.5 million,
respectively, to settle allegations that the banks took part in a scheme
to tamper with prices of SSA bonds, along with several other notable North
American and European financial firms.
The settlement proposal agreement mandates that the banks cooperate with
the claimant class, including providing online chats shared between the
The co-lead counsel for the claimants estimates that thousands of contributors
to U.S. pensions, investment funds, endowments and similar institutions,
will eventually join the settlement class and that the banks’ cooperation
will be helpful in future litigation against remaining defendants.
The proposed settlement also requests that the court identify plaintiffs
Sheet Metal Workers Plan of Northern California, KBC Asset Management
NV, and Iron Workers Pension Plan of Western Pennsylvania as class representatives.
Investors initiated a legal action against the banks regarding the SSA
bonds in 2016, following a report that the financial institutions were
being investigated by U.S. and U.K. officials for violations of anti-competition
regulations for questionable SSA transactions. Nine of those actions were
consolidated in August 2016, and an additional five have subsequently
been added in the interim.
Bank of America was the first to establish a settlement, agreeing to pay
$17 million and providing opposing counsel with a significant amount of
relevant evidence that reflected collusion between the defendants. Shortly
after that, Deutsche Bank initiated settlement efforts as well.
Governments and financial institutions like the World Bank distribute SSA
bonds to finance essential government functions. The plaintiffs claimed
traders employed by the banks circulated confidential customer information
including identities, trading behavior, and order sizes that enabled them
to coordinate bid-ask spreads extended to their clients. This practice,
according to the plaintiffs, reduced market competition.
The proposed class action alleges that thousands of U.S. investors purchased
and sold billions of dollars in SSA bonds through the defendant banks.
It also claims that the banks breached the Sherman Antitrust Act and included
an unjust enrichment claim.
The remaining defendant banks that opted not to settle have filed motions
to dismiss. However, the plaintiffs have requested permission from U.S.
District Judge Edgardo Ramos to submit an amended consolidated complaint.
A pre motion conference is scheduled for August 25.