Law360 (March 25, 2020, 9:38 PM EDT) — A New York federal judge has released several American banks and affiliates of some of the world’s largest financial institutions, including Barclays PLC, Citigroup Inc. and TD Securities, from a proposed class action by investors accusing them of rigging the market for bonds issued by foreign governments.
U.S. District Judge Edgardo Ramos concluded that the investors, who include the Alaska Department of Revenue and the Iron Workers Pension Plan of Western Pennsylvania, failed to plausibly demonstrate how they were affected by the domestic dealers’ alleged bond-rigging, according to a March 18 order unsealed Wednesday.
Judge Ramos’ partly redacted 14-page ruling granting the banks’ dismissal bid said the plaintiffs failed to point to at least one transaction to plausibly bolster allegations that they suffered antitrust harm. Instead, the investors made “conclusory allegations that defendants … executed collusive USD SSA bond trades” with them, the order said.
The judge noted that investors alleged that Barclays Capital Inc., an American unit of the British-based Barclays Investment Bank, acted as the U.S.-based broker-dealer. According to the order, the unit took orders from its overseas affiliates, “served as their counterparty in most transactions, and knowingly executed collusive USD SSA [supranational, subsovereign and agency] bond transactions with plaintiffs during the class period,” and the investors also claimed the American affiliate employed salespeople and traders who engaged in unlawful activities with U.S. customers.
But Judge Ramos said the “plaintiffs do not allege any facts that show a single instance of Barclays Capital Inc. coordinating bidding, engaging in price-fixing, agreeing not to compete, etc.” He added that they asserted “nearly identical conclusory allegations” against the other defendants.
The order came more than five months after the judge issued a similar ruling that threw out bond price-fixing claims against foreign banks and affiliates, including Barclays, Royal Bank of Canada and Citigroup Global Markets Ltd. The judge found that the investors had not met their burden to show that the court had personal or conspiracy jurisdiction over the defendants.
An attorney for the proposed class declined to comment on Wednesday’s unsealed order. Counsel for the banks did not immediately reply to press inquiries.
Governments and institutions including the World Bank issue SSA bonds to fund necessary government operations. The class action was consolidated after investors in 2016 began filing more than a dozen suits against the big banks over the SSA bonds following reports that the financial institutions were under investigation by U.S. and U.K. authorities for anti-competitive behavior.
Several large investors claimed the banks plotted through an interdealer market trading in bonds from various countries and multilateral institutions to fix bond prices for investors.
Some defendants have reached agreements to settle claims against them. HSBC Bank PLC, alongside a U.S.-based affiliate, HSBC Securities (USA) Inc., cut a $30 million deal last year. Bank of America NA and Deutsche Bank AG also agreed to pay a collective $65.5 million in 2017. The remaining defendants asked the court in December 2018 to throw out the second amended complaint.
The investors are represented by Daniel L. Brockett, Sascha N. Rand, Steig D. Olson, Thomas J. Lepri, Christopher M. Seck, Jeremy D. Andersen and Adam B. Wolfson of Quinn Emanuel Urquhart & Sullivan LLP; and David W. Mitchell, Brian O. O’Mara and Carmen A. Medici of Robbins Geller Rudman & Dowd LLP.
The defendant banks are represented by Cleary Gottlieb Steen & Hamilton LLP, Skadden Arps Slate Meagher & Flom LLP, Hogan Lovells US LLP, Cahill Gordon & Reindel LLP, Cravath Swaine & Moore LLP, Paul Weiss Rifkind Wharton & Garrison LLP, Sullivan & Cromwell LLP, Davis Polk & Wardwell LLP and Paul Hastings LLP.
The case is In re: SSA Bonds Antitrust Litigation, case number 1:16-cv-03711, in the U.S. District Court for the Southern District of New York.
–Additional reporting by Christopher Cole, Nadia Dreid and Mike LaSusa. Editing by Peter Rozovsky.