U.S. investors have sued Bank of America (BAC - Free Report) and The Royal Bank of Scotland (RBS - Free Report) for their alleged involvement in forming a cartel along with six other banks to manipulate the Eurozone bond market. The news was reported by Reuters.
The proposed class-action lawsuit, accusing the banks of violating the federal antitrust laws, was filed in the U.S. District Court in New Haven, CT.
The lawsuit follows the Jan 31, 2019 announcement of the European Commission’s probe alleging traders of colluding to acquire and trade sovereign bonds issued by Eurozone governments to mislead competition, between 2007 and 2012.
The regulator had alleged that some of the traders used online chatrooms to exchange commercially sensitive information and coordinated trading strategies on the euro-denominated bonds.
Also, the Commission added that its charges did not imply that anti-competitive conduct was a general practice in the euro zone government bond sector.
While there is no legal deadline for the regulator to complete the probe, the duration depends on a number of factors, including cooperation of concerned parties. Also, the Commission can impose fines of up to 10% of a company's annual worldwide turnover.
Earlier, in December 2018, antitrust regulators accused Deutsche Bank (DB - Free Report) , Credit Agricole and Credit Suisse (CS - Free Report) of being involved in a similar bond trading cartel between 2009 and 2015. The banks were charged of rigging prices of U.S. dollar-denominated government bonds using similar tactics.
Banks around the world continue to face probes and lawsuits for legacy business mishandling issues. These have an adverse impact on their financials as legal expenses and/or additional legal provisions hurt the bottom line to some extent.
Currently, both BofA and Royal Bank of Scotland carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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