Four banking giants are preparing to pay nearly half a billion dollars to settle a class action lawsuit filed against them for allegedly attempting to thwart competition in the equity lending market.
JPMorgan, Goldman Sachs, UBS and Morgan Stanley have agreed to jointly pay $499 million to resolve the lawsuit, which was filed in 2017 by U.S. pension funds led by the Iowa Public Employees’ Retirement System.
The pension funds accuse the banks of trying to conquer the market with their own system called EquiLend, while hindering the development of new platforms that would carry out the borrowing and lending of electronic securities.
EquiLend was founded in 2001 by Barclays Global Investors, Bear Stearns, Goldman Sachs, JPMorganChase, Lehman Brothers, Merrill Lynch, Morgan Stanley, Northern Trust, State Street and UBS Warburg, and is now owned by Bank of America.
Credit Suisse has already paid an $81 million fine to settle the lawsuit, and Bank of America is now the last remaining defendant not yet settled.
None of the banks have issued a statement on the matter and EquiLend has denied all allegations. Representatives say it has reached a settlement to continue running day-to-day operations for its customers, the Financial Times reported.
According to court documents, the plaintiffs hope the settlement will prevent similar alleged anti-competitive practices in the future.
“While Defendants have denied any wrongdoing and that any reforms were necessary, Plaintiffs believe that the equitable relief they designed and negotiated will help bring EquiLend into line with antitrust and antitrust cooperation best practices and guidelines competitors.
Claimants believe that the reforms should significantly reduce the likelihood of future collusion in the equity lending market, and therefore claimants believe that the reforms thereby increase the chances of the industry transitioning to a more competitive trading environment.
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