12 Banks Sued by Sheet-Metal Union Over Credit-Swap ‘Fix’ (1)

[Omaha Steve]

http://www.businessweek.com/news/2013-05-07/twelve-banks-sued-over-claims-they-restrained-credit-swap-market

By Andrew Harris and Phil Milford

May 07, 2013


Goldman Sachs Group Inc. (GS), Citigroup Inc. (C) and 10 other banks have restrained market competition for credit default swaps in violation of U.S. antitrust law, an Ohio union pension plan contends in a federal court complaint.

“The CDS market has been starkly divided between those who control and distort the market and those who, in order to participate in the market, must abide their distortions,” according to papers filed May 3 in Chicago.

Sheet Metal Workers Local No. 33 Cleveland District Pension Plan, based in Parma, Ohio, seeks damages for what it says are “substantial injuries” it and people and entities on the “buy side” sustained in buying or selling CDS contracts to the “sell side” dealer-defendants between 2008 and 2011.

Credit-default swaps pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt. The contracts, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, decline as investor confidence improves and rise as it deteriorates.

FULL story at link.

[Sherman A1]

1. K&R

This will prove interesting! I hope they succeed!