Five major banks and four traders
were sued on Wednesday in a private U.S. lawsuit claiming they conspired to rig
prices worldwide in a more than $9 trillion market for bonds issued by
government-linked organizations and agencies.
Bank of America Corp
(BAC.N), Credit Agricole SA (CAGR.PA), Credit Suisse Group AG (CSGN.S), Deutsche Bank AG (DBKGn.DE) and Nomura Holdings Inc (8604.T) were accused of secretly
agreeing to widen the "bid-ask" spreads they quoted customers of
supranational, sub-sovereign and agency (SSA) bonds.
The lawsuit filed in Manhattan
federal court by the Boston Retirement System said the collusion dates to at
least 2005, was conducted through chatrooms and instant messaging, and caused
investors to overpay for bonds they bought or accept low prices for bonds they
sold.
"Only through collusion could
a dealer quote a wider spread than market conditions otherwise dictate without
losing market share and profits," the complaint said. "Defendants
reaped millions of dollar(s) in profits at the expense of plaintiff and members
of the class as result of their misconduct."
The proposed class-action lawsuit
seeks triple damages, and follows probes by U.S. and European Union antitrust
regulators into possible SSA bond price rigging.
Those probes are also examining
the London-based defendant traders Hiren Gudka of Bank of America, Bhardeep
Singh Heer of Nomura, Amandeep Singh Manku of Credit Agricole and Shailen Pau
of Credit Suisse, Thomson Reuters' IFR service reported in January.
Bank of America, Credit Suisse,
Deutsche Bank and Nomura declined to comment on behalf of themselves and the
traders who have worked for them. Credit Agricole did not immediately respond
to a request for comment.
Gudka previously worked at
Deutsche Bank, Manku at Bank of America, and Pau at Credit Agricole, the
complaint said.
The lawsuit is one of many in the
Manhattan federal court seeking to hold banks liable for alleged price-fixing
in bond, commodity, currency, derivatives, interest rate and other financial
markets.
One such lawsuit, concerning
competition in the credit default swaps market, led last September to a $1.86
billion settlement with a dozen banks.
SSA bonds are sold in various
currencies by issuers such as regional development banks, infrastructure
borrowers including highway and bridge authorities, and social security funds.
Many carry explicit or implicit
backing from governments, and thus enjoy high investment-grade ratings.
The case is Boston Retirement
System v Bank of America NA et al, U.S. District Court, Southern District of
New York, No. 16-03711.
(Reporting by Jonathan Stempel in
New York; Editing by Toni Reinhold)
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