Bank of America, et al. accused of anti-competitive conduct

By Robbie Hargett | Mar 25, 2016

CHICAGO (Legal Newsline) – Several financial institutions are being sued over alleged anti-competitive conduct in the market for interest rate swaps (IRS).

Harrison County, Mississippi, Magnolia Regional Health Center and Cullman Regional Medical Center, individually and for all others similarly situated, filed a class-action lawsuit Feb. 18 in U.S. District Court for the Northern District of Illinois against Bank of America Corp., et al., alleging unjust enrichment and conspiracy to restrain trade in violation of the Sherman Act.

The suit states that IRS are a type of financial derivative used to manage interest rate risk and/or speculate on the direction of rates. The defendants are allegedly the primary dealers of IRS in the U.S. and dominate the market.

According to the suit, IRS transactions have historically been executed on an over-the-counter basis, which benefits the defendants, as it limits the buyer's ability to comparison-shop using real-time price information.

The suit states that over time, many financial products and derivatives have migrated from over-the-counter to exchange-style execution, which benefits competition and consumers.

However, the defendants have allegedly tried to forestall the development of exchange-style trading for IRS by using their market power to exclude rivals and new entrants from the marketplace.

The defendants allegedly boycotted and collusively targeted a series of new electronic trading platforms that would have allowed direct and/or anonymous comparison-shopping and IRS execution for the buyer.

The plaintiffs seek treble damages, interest, monetary losses, attorney fees, costs of the suit and a judgment that the defendants be permanently enjoined and restrained from continuing and maintaining the alleged conspiracy.

They are represented by attorneys George A. Zelcs, Randall P. Ewing, Robert E. Litan and Steven M. Tillery of Korein Tillery in Chicago and St. Louis, Missouri; attorneys Michael J. Guzman and Derek T. Ho of Kellogg Huber Hansen Todd Evans & Figel in Washington, D.C.; and attorneys R. Bryant McCulley and Stuart H. McCluer of McCulley McCluer in Isle of Palms, South Carolina.

U.S. District Court for the Northern District of Illinois Case number 1:16-cv-02382

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