Ten big banks settle US interest rate swaps rigging litigation

By Jonathan Stempel

NEW YORK (Reuters) - Ten large banks including Bank of America, Goldman Sachs and JPMorgan Chase will pay $46 million to settle a long-running antitrust lawsuit accusing them of conspiring to rig the now $465.9 trillion market for interest rate swaps.

Lawyers for investors filed a preliminary settlement to end the eight-year-old nationwide case on Thursday in Manhattan federal court.

The settlement requires approval by U.S. District Judge Paul Oetken, and boosts the value of all settlements in the case to $71 million.

Other settling banks include Barclays, BNP Paribas, Citigroup, Deutsche Bank, Morgan Stanley, NatWest and UBS.

Investors led by the city of Baltimore and pension funds in Chicago, Los Angeles and Michigan accused the banks of trying from 2013 to 2016 to corner swaps trading, in part by boycotting three upstart platforms that offered better prices and let buy-side investors trade with each other.

This allegedly led to "tremendous profits" for the banks because of their role as dealers, primarily in the form of bid/ask spreads, the investors said.

Credit Suisse, now part of UBS, agreed in 2022 to pay $25 million to settle investors' claims. A different judge dismissed a 12th bank, HSBC, as a defendant in 2017.

All of the banks have denied wrongdoing.

Oetken's refusal in December to certify a class action made the investors' case more difficult, because it's often more costly and not worth the trouble for individual investors to sue on their own.

Lawyers for the investors did not immediately respond to requests for comment. They called the settlement an "excellent recovery" given the challenges of further litigation, oourt papers show.

Interest rate swaps let parties exchange future interest payments, typically by exchanging a fixed rate for a floating rate, to manage risk or bet on whether rates will rise or fall.

The case is part of more than a decade of litigation in Manhattan accusing big banks of colluding in various markets including interest rate benchmarks, U.S. Treasuries, currencies and commodities.

The case is In re: Interest Rate Swaps Antitrust Litigation, U.S. District Court, Southern District of New York, No. 16-md-02704.

(Reporting by Jonathan Stempel in New York; editing by Diane Craft)