Anti-Trust Case Moves Forward Against Wall Street Banks

By William Vogeler, Esq. on October 02, 2018 | Last updated on March 21, 2019

A federal judge cleared the way for an anti-trust lawsuit against six of the biggest banks on Wall Street.

The proposed class-action alleges the banks engaged in an "illegal conspiracy" to drive out competitors from the $2 trillion stock lending market.

Big litigation has hurt big banking in recent years, but the latest allegations haven't seemed to change the landscape on Wall Street. The banks have paid for anti-trust violations before, and their stocks are up.

"In the Stone Age"

Reuters reported the case against Goldman Sachs, JP Morgan, Bank of America, Credit Suisse, Morgan Stanley, and UBS Group. The lawsuit says they tried to keep the stock lending market "in the stone age" by boycotting startups ADQS, Data Explorers, and SL-x.

The plaintiffs, including several employee pension funds, allege the banks used their positions on the board of co-defendant EquiLend LLC to monopolize the market. That allowed the banks to charge excessive fees to investors, according to the complaint.

The banks asked Judge Katherine Polk Failla to dismiss the case, arguing they did nothing illegal. However, the judge found "sufficient direct evidence" to proceed.

"This dispute boils down to whether the allegations concern conduct by EquiLend alone, or conduct undertaken by the prime broker defendants using EquiLend," Failla wrote. "The amended complaint adequately pleads that defendants' concerted actions amounted to an unreasonable restraint on trade."

Previous Anti-Trust Settlement

Most of the defendants have been here before. In 2015, they agreed to pay $1.865 billion to settle an anti-trust case.

Investors alleged the banks -- including Goldman Sachs, JP Morgan, Bank of America, Credit Suisse, Morgan Stanley, and UBS AG -- conspired to fix prices and limit competition for credit default swaps.

The defendants have four weeks to answer the latest anti-trust complaint. In the meantime, Business Insider reported that stocks for Goldman Sachs and JP Morgan are up.

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