Seven Banks to Pay $324 Million to Resolve ISDAfix Claims

  • Bank of America, Barclays, Citigroup, Credit Suisse settle
  • Investors claimed banks colluded in setting benchmark rate

Seven banks including Bank of America Corp., Barclays Bank Plc and Citigroup Inc. agreed to pay $324 million to settle claims they conspired to rig the ISDAfix benchmark, which is used in the sale of interest-rate derivatives and other financial instruments.

The settlements follow a ruling by U.S. District Judge Jesse Furman in Manhattan rejecting the banks’ request that he throw out the claims. Furman said in March that a group of investors led by an Alaska pension fund had raised “plausible allegations that a conspiracy among the defendants existed” and allowed the suit to go forward.

The investors claimed that, beginning in 2009, the banks used electronic chat rooms and other means of private communication to set ISDAfix, typically submitting identical rate quotes, investors said in their suit. They were seeking billions of dollars in losses tied to the alleged rate-fixing scheme.

“We are very pleased that these banks are offering our clients hundreds of millions of dollars in recovery,” David R. Scott, managing partner of Scott & Scott, said in a statement Tuesday. Scott’s firm is co-lead counsel for the investors in the ISDAfix litigation.

The investors sued 14 banks in 2014 on behalf of a nationwide class of investors with ISDAfix-based transactions from Jan. 1, 2006, through January 31, 2014, who lost money because of the alleged collusion. Furman must approve the settlement.

Under the accord, Bank of America will pay $50 million; Barclays will pay $30 million; Citigroup, $42 million; Credit Suisse Group AG, $50 million; Deutsche Bank AG, $50 million; JPMorgan Chase & Co., $52 million; and Royal Bank of Scotland Group Plc, $50 million.

Transaction Data

The settling companies have agreed to provide "cooperation, transaction data, documents, proffers, and witness interviews," to be used against the seven banks that haven’t settled, according to court papers filed by the investors seeking approval of the settlement.

Citigroup, Bank of America and Deutsche Bank declined to comment on the settlement. Representatives of Barclays, Credit Suisse, JPMorgan and RBS didn’t immediately respond to phone and e-mail messages seeking comment on it.

The banks remaining in the case are BNP Paribas SA, Goldman Sachs Group Inc., HSBC Bank USA, Morgan Stanley & Co., Nomura Securities International Inc., UBS AG and Wells Fargo Bank NA. ICAP Capital Markets LLC, which served as administrator of the ISDAfix setting process, also remains as a defendant.

Negotiations began with Barclays in June 2015, the investors said in the court filing. Settlements with the other banks followed.

The case is Alaska Electrical Pension Fund v. Bank of America, 14-cv-07126, U.S. District Court, Southern District of New York (Manhattan).

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