May 7, 2013 (PLANSPONSOR.com) – A pension fund filed a lawsuit alleging misconduct in the transaction of credit default swaps (CDS) by a number of large financial institutions.
Sheet Metal Workers Local No. 33 Cleveland District Pension Plan filed an antitrust class action to recover damages for the substantial injuries that it claims it and others have sustained and to prevent and enjoin from conspiring to restrain competition in the market for CDS. The pension fund alleges anticompetitive conduct was carried out by Barclays, BNP Paribas, Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan, Morgan Stanley, RBS, and UBS (Dealer Defendants), as well as through entities they own or control, including International Swaps and Derivatives Association (ISDA), Markit Group Ltd., ICE Clear Credit, and the Depository Trust & Clearing Corporation (DTCC).
According to the complaint, Dealer Defendants restricted who could act as a dealer, deprived buy side market participants of actual, real-time pricing information, prevented exchange trading, and maintained inflated bid-ask spreads on CDS transactions to the detriment of buy side participants in the CDS market. “Dealer Defendants undertook this anticompetitive conduct to forestall entry and maintain control of the CDS market, and consequently, their actions caused billions of dollars of damages to class members during the relevant period,” the lawsuit says.
In a statement, Markit Group said, “Markit has not been served with the complaint filed by this class action law firm but we have seen a copy of it. The allegations are wholly without merit and we will defend ourselves vigorously.” Goldman Sachs, JP Morgan and Morgan Stanley declined to comment about the suit.