Major banks win antitrust case in the US related to bond trading.

Federal Court Dismisses Antitrust Lawsuit Against Major Banks

A federal judge dismissed an antitrust lawsuit on Tuesday, which claimed that ten large banks manipulated corporate bond prices to the detriment of ordinary investors. The judge had previously recused herself due to her spouse holding shares in one of the banks involved.

Investors alleged that Bank of America, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley, NatWest, and others engaged in “odd-lot” transactions, overcharging billions of dollars since 2006. These transactions generally involved fewer than 1,000 bonds or were valued under $1 million, which represented a significant portion of corporate bond dealings. It was claimed that when banks charged illegally, profit margins could climb between 25% and 300% compared to larger transactions.

Judge Valerie Caproni of the Manhattan District Court stated that plaintiffs failed to sufficiently demonstrate that the banks operated their trading activities as unfairly as alleged. While these banks reportedly controlled about 65% of U.S. underwriting and 90% of bond trading volume, the judge remarked that this didn’t imply they had the authority to dictate pricing in the secondary bond market.

Additionally, the judge declined to move forward with conspiracy allegations that had initially been raised prior to the case’s filing in April 2020, which had taken four years to reach this point.

Lawyers representing investors haven’t commented yet on this ruling, which effectively closes the case without possibility of re-filing it.

The original dismissal occurred in October 2021, led by Judge Lewis Liman. Shortly after, it was revealed that Liman’s wife owned Bank of America shares during the case, but he maintained that this did not influence his judgment.

In July 2024, a federal appeals court in Manhattan revived the lawsuit, suggesting doubts about Liman’s impartiality could be valid. However, there were no fraud accusations against him in this context.