Antitrust Law Daily Claims against domestic dealers in SSA bond rigging suit fail
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Thursday, March 26, 2020

Claims against domestic dealers in SSA bond rigging suit fail

By Nicole D. Prysby, J.D.

Claims that the defendants undermined competition and colluded by sharing competitive information failed for lack of antitrust standing and failure to sufficiently plead a conspiracy.

Claims that domestic dealers rigged the supranational, sovereign, and agency (SSA) bond market failed for lack of antitrust standing and injury, held the federal district court in New York City. The plaintiffs alleged that traders and banks undermined competition in the SSA bond market by strategically coordinating bids to avoid competing with one another and colluding to share sensitive competitive information. But they failed to demonstrate antitrust injury—allegations that they paid a higher price for a transaction due to the reduced market competition were not sufficient, because they failed to identify which of the defendants entities was involved in the transaction. The plaintiffs also failed to plead a plausible conspiracy. For example, they alleged that two banks participated in the conspiracy through the same individual defendant, but the transactions described did not involve any specific plaintiff or point to a wider conspiracy to the other domestic dealer defendants (In re SSA Bonds Antitrust Litigation, March 25, 2020, Ramos, E.).

The litigation arose from complaints filed against banks and their employees who allegedly conspired to fix the price of SSA bonds sold to and purchased from investors in the secondary market. SSA bonds are bonds issued by certain large, multilateral institutions that often have global economic mandates. The defendants are traders and banks that act as market makers for U.S. dollar-denominated SSA bonds. According to the plaintiffs, the defendants undermined competition by engaging in numerous anticompetitive activities, including strategically coordinating bids to avoid competing with one another and colluding to share sensitive competitive information with each other. For example, the plaintiffs alleged that when an investor contacted one or more dealers to purchase a bond, the defendants would communicate with each other via chat rooms and phone calls to achieve more favorable prices and terms for themselves. Claims against some defendants (individuals and foreign dealers) were previously dismissed. The domestic dealer defendants now sought dismissal of the claims against them.

The plaintiffs lacked antitrust standing, according to the court. They alleged that they bought and sold USA SSA bonds from the defendants, but did not plausibly allege antitrust harm. They made conclusory allegations against defendants, without citing specific transactions that led to any alleged harm. Allegations that they paid a higher price for a transaction due to the reduced market competition were not sufficient, because the plaintiffs failed to identify which of the defendants entities was involved in the transaction. The court also rejected an argument from plaintiffs that it should consider the plausibility of the overarching conspiracy they alleged in connection to the defendants’ argument that plaintiffs lack standing.

In addition, the alleged conspiracy was not plausible, the court determined. The complaint failed to allege a conspiracy that includes any of the domestic dealer defendants. The plaintiffs were already given an opportunity to correct their improper group pleading and failed to do so, the court noted—they continued to make undifferentiated allegations against all defendants and tied together corporate affiliates without justification. The plaintiffs argued that they did not need to show that every defendant knew all of the details of the conspiracy or knew all of the identities of the other conspirators, and that a single act could demonstrate involvement in a conspiracy. But they failed to make specific allegations against any particular defendant. For example, they alleged that Citigroup, Inc. and Citibank N.A. participated in the conspiracy through the same individual defendant, but the transactions described did not involve any specific plaintiff or point to a wider conspiracy to the other domestic dealer defendants.

This case is No. 1:16-cv-03711-ER.

Attorneys: Ashley M. Kelly (Robbins Geller Rudman & Dowd LLP) for Alaska Department of Revenue, Treasury Division and Alaska Permanent Fund Corp. Adam Selim Hakki (Shearman & Sterling LLP) for Bank of America, N.A and Bank of America Merrill Lynch International Ltd. John Terzaken (Simpson Thacher & Bartlett LLP) for Deutsche Bank AG. Daniel Lawrence Stein (Mayer Brown LLP) for HSBC Holdings PLC.

Companies: Alaska Department of Revenue, Treasury Division; Alaska Permanent Fund Corp.; Bank of America, N.A.; Bank of America Merrill Lynch International Ltd.; HSBC Holdings PLC

MainStory: TopStory Antitrust NewYorkNews GCNNews

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