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Goldman Sachs, Morgan Stanley, JPMorgan Chase and UBS have agreed to pay nearly $500 million to settle a long-running lawsuit alleging they failed to modernize the opaque $2.7tn stock debt market. Antitrust laws have been violated by blocking the efforts.
In a settlement announced Wednesday, the banks will pay $499 million to a class of investors led by several US pension funds in Iowa, Los Angeles, Orange County and Sonoma County.
EquiLend, an industry-owned platform for lending and borrowing electronic securities, is also part of the agreement. Credit Suisse agreed to pay $81mn in 2022 to settle the case. The action continues against another defendant, Bank of America.
As part of the settlement, Equiland has agreed to “specific improvements to prevent the collusion and market abuse occurring in this matter, as well as to provide support in its ongoing litigation against Bank of America,” according to the plaintiffs. The lawyers said. a statement.
Equiland said it “vehemently denies any wrongdoing in this matter, but is pleased to have reached a resolution and reaffirms its commitment to ensuring uninterrupted day-to-day business operations for its customers.” does”. It added that the settlement “will have no impact on our business”.
JPMorgan, Goldman Sachs, Morgan Stanley and UBS, as well as Bank of America, declined to comment.
The case began in 2017 when plaintiffs filed a lawsuit in Manhattan federal court alleging that the banks had colluded to hinder the development of exchanges such as AQS in the US and SL-x in Europe, which potentially Could help reduce the cost of taking. Stock to lenders and borrowers.
Securities lending is the practice of lending assets by institutional investors to each other for a fee. Borrowers are hedge funds, investment banks and broker-dealers.
EquiLand was launched in 2002, backed by several banks including Goldman, JP Morgan, Morgan Stanley, UBS, Lehman Brothers and Merrill Lynch, now owned by BofA.
The plaintiffs claimed that the banks had boycotted investors who borrowed from other platforms, while also attempting to hinder the upstart exchanges’ progress by purchasing their underlying intellectual property and putting it in cold storage.
Plaintiffs alleged that this left them “trapped in an antiquated market structure and forced to pay supercompetitive ‘spreads’ to defendant banks for their role as intermediaries in the stock debt market”.
“We are very pleased to have partially settled this matter and the significant impact it has had on Equiland’s operations. As the case progresses, we look forward to holding Bank of America accountable,” said Michael Eisenkraft, partner at Cohen Milstein Sellers & Toll, one of the two firms that represented the plaintiffs along with Quinn Emanuel. was represented.