Big banks defeat U.S. Treasury rigging appeal

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NEW YORK (Reuters) – A federal appeals court on Thursday dismissed an appeal by investors who accused 10 of the world’s largest banks of antitrust violations for conspiring to suppress competition in the now $26 trillion market for U.S. Treasury securities.

In a 3-0 decision, the 2nd U.S. Circuit Court of Appeals in Manhattan said the 18 plaintiffs, including pension and retirement funds, did not plausibly allege that the banks violated the Sherman antitrust law by conspiring to rig Treasury auctions, or to boycott newer platforms for trading Treasuries.

The banks include Bank of America, Barclays, BNP Paribas (OTC:BNPQY), Citigroup, Goldman Sachs, JPMorgan Chase (NYSE:JPM), Morgan Stanley, NatWest and UBS. Credit Suisse was also a defendant before UBS bought it last June.

Investors alleged that banks colluded from 2007 to 2015 to use chat rooms to swap confidential customer orders, and then exploiting their “collective pool of knowledge” to buy Treasuries at higher yields and lower prices.

Bank of America, Barclays, Citigroup, Credit Suisse, Goldman Sachs, JPMorgan and Morgan Stanley were also accused of colluding to boycott electronic platforms that offered better prices and direct trading between buyside investors, known as “all-to-all,” to benefit their own platform.

In a 72-page decision, Circuit Judge Dennis Jacobs said information shared on chatrooms was largely “inconsequential market chatter,” and the plaintiffs’ statistical analyses didn’t focus specifically on what the banks supposedly did wrong.

Jacobs called the boycott allegations even weaker. He said the plaintiffs’ use of “scattered” data points over two decades, and claim that the banks threatened rival trading platforms, did not create an “actionable conspiratorial narrative.”

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

Thursday’s decision upheld a March 2022 ruling by U.S. District Judge Paul Gardephe in Manhattan.

The case began in July 2015, following news reports that the U.S. Department of Justice was probing Treasury manipulation.

Banks have separately paid billions of dollars in criminal and civil penalties to settle probes into the rigging of foreign currencies and the now-defunct interest rate benchmark Libor.

The case is In re: Treasury Securities Auction Antitrust Litigation, 2nd U.S. Circuit Court of Appeals, No. 22-943.