Judge Dismisses Antitrust Lawsuit Against 10 Banks Over Corporate Bond Trades

Ten big banks, including Bank of America, Barclays, and Goldman Sachs, have been cleared of antitrust charges for allegedly rigging corporate bond prices. A US judge dismissed the lawsuit, finding that investors failed to prove the banks conspired to overcharge on "odd-lot" trades. The banks controlled 65% of US underwriting and 90% of US trading volume in corporate bonds but were not found to control secondary market pricing. The case cannot be brought again.

A U.S. federal judge has dismissed an antitrust lawsuit that accused ten of the world’s largest banks of conspiring to inflate prices in the corporate bond market. The lawsuit alleged that Bank of America, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley, NatWest, and Wells Fargo overcharged clients on "odd-lot" bond trades, which typically involve fewer than 1,000 bonds or transactions valued at under $1 million [1].

The case, filed by investors, claimed that the banks charged spreads up to 300% higher than those applied to larger transactions. However, U.S. District Judge Valerie Caproni in Manhattan ruled that the plaintiffs had not proven the banks worked together to manipulate trading platforms or to shut out competitors offering fairer pricing [1].

Judge Caproni noted that although the institutions accounted for roughly 65% of underwriting and 90% of trading in corporate bonds, this alone did not establish control over secondary market pricing. She also found no evidence of illegal activity in the four years preceding the April 2020 filing, a gap that undermined the case under the Sherman Antitrust Act [1].

The dismissal was issued with prejudice, meaning the lawsuit cannot be refiled. Attorneys representing the investors did not immediately comment on the ruling [1].

The case had a complicated history. It was first dismissed in October 2021 by Judge Lewis Liman. Months later, his clerk revealed that Liman’s wife owned shares in Bank of America while the case was pending. Though the appeals court later found the conflict likely unintentional, it revived the lawsuit in July 2024, saying the judge’s impartiality could reasonably be questioned. Liman was never accused of misconduct [1].

The case is titled Litovich v. Bank of America Corp. et al., in the Southern District of New York, No. 20-03154 [1].

References:
[1] https://www.pymnts.com/cpi-posts/judge-dismisses-antitrust-case-against-major-banks-over-bond-pricing/
[2] https://www.investing.com/news/stock-market-news/ten-big-banks-defeat-antitrust-lawsuit-in-us-over-bond-trades-4219940
[3] https://www.ainvest.com/news/judge-dismisses-antitrust-case-major-banks-2509/
[4] https://www.ainvest.com/news/opendoor-surges-14-retail-frenzy-meme-stock-momentum-trading-volume-hits-1-94b-ranking-30th-2509/