A private US lawsuit has been settled by seven of the world's largest banks for $324 million. The lawsuit accuses the banks for rigging a benchmark interest rate in the $553 trillion derivatives market. The settlement has been made public on Tuesday and requires further court approval to resolve the antitrust claims.
The seven banks under settlement are Bank of America Corp., Barclays Plc, Citigroup Inc, Credit Suisse Group AG, Deutsche Bank AG, JPMorgan Chase & Co and Royal Bank of Scotland Group Plc. 14 banks, including the 7, have been accused of conspiring to rig the "ISDAfix" benchmark for their own gain by several pension funds and municipalities. The rigging has allegedly been taken place from at least 2009 to 2012, reports Reuters.
The benchmark rate is used by companies and investors to price swaps transactions, commercial real estate mortgages and structured debt securities. The banks have allegedly executed rapid trades just prior to setting the daily rate.
The illegal move has forced British brokerage to delay trades until moving the benchmark rate to their desired positions. Eventually, the rates haven't reflected market activity, according to an analysis published in The Australian Financial Review. JPMorgan will count penalty for $52 million and $50 million each by Bank of America, Credit Suisse, Deutsche Bank and RBS, under the settlement agreement. Meanwhile, Citigroup will have to pay $42 million and $30 million will be paid by Barclays, reports St. Louis Post. BNP Paribas SA, Goldman Sachs Group Inc., HSBC Holdings Plc, Morgan Stanley, UBS AG and Wells Fargo Co. are yet to settle the rigging charge. Spokesmen for BNP Paribas, HSBC, Morgan Stanley and UBS have declined to comment upon requests. However, the remaining defendants haven't immediately responded to the requests for comments. The settlement takes after Jesse Furman, US District Judge in Manhattan has refused to dismiss the lawsuit five weeks ago. Notably mentioning, Barclays has agreed paying $115 million fine to settle a probe conducted by Commodity Futures Trading Commission. Meanwhile, the US and European regulators have reportedly been scrutinizing the ISDAfix setting procedure. The lawsuit that has been settled is one of many pending in Manhattan federal court accusing banks of rigging benchmark interest rates.
