A U.S. judge on Wednesday dismissed long-running litigation accusing 10 large banks of conspiring to suppress competition in the now $21.2 trillion market for U.S. Treasury securities.
U.S. District Judge Paul Gardephe in Manhattan ruled against 21 pension, retirement and benefit funds, as well as unions, banks, individuals, and companies that traded in Treasuries, in the proposed antitrust class action.
The defendants included Bank of America, Barclays, BNP Paribas, Citigroup, Credit Suisse, Goldman Sachs, JPMorgan Chase, Morgan Stanley, NatWest Group and UBS, as well as trading platform operator Tradeweb Markets.
Traders said the 10 banks, which from 2010 to 2014 handled an estimated 75% of Treasury trades through the Federal Reserve Bank of New York, used chat rooms to swap confidential customer orders and coordinate strategies, to profit at clients' expense.
They said seven of the banks also conspired to boycott electronic trading platforms that offered "anonymous" trading and better prices for clients.
Manipulation allegedly occurred in the "when-issued" market, or the period between when auction dates are announced and securities are delivered.
But in a 53-page decision, Gardephe found no plausible direct evidence of an antitrust conspiracy, and said the plaintiffs' statistical analyses were "no substitute" for evidence of individual or collective wrongdoing.
"Plaintiffs' statistical analyses are at most a 'plus factor,'" he wrote. "But plus factors alone are not sufficient; a plaintiff must also adequately allege parallel conduct. That Plaintiffs have not done."
The claims date as far back as 2007. Gardephe gave the plaintiffs until April 30 to amend their complaint.
One of the plaintiffs' lawyers, Dan Brockett from Quinn Emanuel Urquhart & Sullivan, said they "will consider all options to protect the interests of the class."
The litigation began in July 2015, shortly after news reports that the U.S. Department of Justice was probing possible Treasury manipulation by banks.
Earlier probes into manipulation of the Libor interest rate benchmark and foreign currencies resulted in billions of dollars in criminal and civil penalties for banks worldwide.
The case is In re: Treasuries Securities Auction Antitrust Litigation, U.S. District Court, Southern District of New York, No. 15-md-02673.