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JPMorgan (JPM), Others Clinch Victory in Treasury Rigging Case
The 2nd U.S. Circuit Court of Appeals in Manhattan has dismissed an appeal by investors who accused Bank of America (BAC - Free Report) , Citigroup (C - Free Report) , JPMorgan (JPM - Free Report) and a few other big banks of rigging the $26-trillion U.S. treasury securities market. The news was reported by Reuters.
Investors claimed that these banks conspired to use chat rooms to swap confidential customer orders between 2007 and 2015. It was also alleged that the banks exploited their “collective pool of knowledge” to buy treasuries at higher yields and lower prices.
Apart from BAC, C and JPM, the defendants included The Goldman Sachs Group (GS - Free Report) , Morgan Stanley (MS - Free Report) , Barclays PLC (BCS - Free Report) , BNP Paribas SA, NatWest Group plc and UBS Group AG.
In addition to the above-mentioned allegations, there were claims that Bank of America, BCS, Citigroup, GS, JPMorgan and MS colluded to boycott electronic platforms that offered better prices and direct trading between buy-side investors to benefit their own platforms.
However, Circuit Judge Dennis Jacobs said that plaintiffs, including pension and retirement funds, did not reasonably claim that the banks violated the Sherman antitrust law by conspiring to rig treasury auctions or to boycott newer platforms for trading treasuries.
Per the court’s decision, the information shared on chatrooms was largely “inconsequential market chatter.”
Also, Jacobs felt that plaintiffs’ statistical analyses did not focus specifically on what the banks apparently did wrong.
Jacobs said that plaintiffs’ use of scattered data points and claims that the banks threatened rival trading platforms did not create an “actionable conspiratorial narrative.”
The case began in July 2015 after it was reported that the U.S. Department of Justice was examining treasury manipulation.
Currently, BAC, GS, MS and C carry a Zacks Rank #3 (Hold). JPM carries a Zacks Rank #2 (Buy). BCS carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.