U.S. judge rejects 14 banks' bid to throw out rate-rigging lawsuit

BY JONATHAN STEMPEL - Mon Mar 28, 2016 12:23pm EDT

A federal judge in Manhattan on Monday rejected an effort by 14 of the world's biggest banks to throw out a private lawsuit accusing them of rigging an interest rate benchmark used in the $553 trillion derivatives market.

U.S. District Judge Jesse Furman said investors led by several pension funds and municipalities could pursue federal antitrust claims over an alleged conspiracy to rig "ISDAfix" from 2009 to 2012, and breach of contract and unjust enrichment claims against most defendants. Other claims were dismissed.

The defendants include Bank of America Corp, Barclays Plc, BNP Paribas SA, Citigroup Inc, Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc, HSBC Holdings Plc, JPMorgan Chase & Co, Morgan Stanley, Nomura Holdings Inc, Royal Bank of Scotland Group Plc, UBS AG and Wells Fargo & Co.

ICAP Plc, a British brokerage that once oversaw U.S. dollar ISDAfix, is also a defendant.

The lawsuit seeks to recoup billions of dollars of alleged losses. Regulators have also examined ISDAfix manipulation.

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Banks were accused of rigging ISDAfix for their own gain by executing rapid trades just before the rate was set each day, called "banging the close"; and causing ICAP to delay trades until they moved ISDAfix where they wanted, and post rates that did not reflect market activity.

In his 36-page decision, Furman said "that sort of coordinated action in a supposedly competitive market is precisely the sort of anticompetitive behavior the antitrust laws were intended to prevent."...

Read more:
http://www.reuters.com/article/us-banks-rigging-lawsuit-idUSKCN0WU1E8

California has decided to sue Morgan Stanley because of what they view as irresponsible lending behavior that led to the problem. Residential mortgage-backed securities were collected together and sold as high-risk loans to subprime lenders — a process California lawmakers are deeming irresponsible, including Attorney General Kamala Harris.

“Morgan Stanley’s conduct in this case evidenced a culture of greed and deception that helped create a devastating economic crisis and crippled California’s budget.”

The lawsuit alleges that Morgan Stanley deserves to be sued because of these risky decisions. Seniors who relied almost entirely on the California public pension funds for retirement have been devastated by the losses.

http://www.inquisitr.com/2952866/morgan-stanley-sued-state-of-california-goes-after-big-bank-for-billions/