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U.S. Treasury auction-rigging lawsuits assigned to New York judge
December 8, 2015 / 11:58 PM / 2 years ago

U.S. Treasury auction-rigging lawsuits assigned to New York judge

WASHINGTON (Reuters) - Twenty-five civil securities and antitrust class action cases alleging that big banks are rigging U.S. Treasury auctions will be heard by a federal judge in New York’s Southern District, according to a court filing on Tuesday.

The U.S. Judicial Panel on Multidistrict Litigation, which is responsible for consolidating related lawsuits, said U.S. District Judge Paul G. Gardephe will preside over the case.

The pending class action against banks and brokerages that act as primary dealers, such as Goldman Sachs, Barclays and Deutsche Bank comes as the U.S. government is conducting a separate early-stage probe into the same activity, according to several people familiar with the matter.

The U.S. Justice Department and the Commodity Futures Trading Commission both sent banks requests for documents in the late summer, one of those people told Reuters.

The New York Department of Financial Services has sent similar inquiries concerning the Treasury auction process to the banks it oversees, two other people told Reuters.

A precise list of the banks who received inquiries from the DOJ and CFTC could not be immediately determined.

A total of 22 banks serve as primary dealers in the government debt marketplace.

Spokesmen for the DOJ and CFTC have not commented on the probes because they are not considered public.

None of the banks who have received inquiries have been accused by the government of wrongdoing in Treasury auctions.

The class action lawsuits allege that the banks have colluded to manipulate Treasury Department auctions and the pricing of Treasury securities as well as derivative products such as futures, whose value is pegged to the Treasury.

In particular, the class action lawsuits allege manipulation in the so-called “when-issued market” - or the period between when the auction date is announced and the auctioned securities are delivered.

Some banks have paid billions in criminal and civil penalties in connection with collusion to manipulate the Libor interest rate benchmark and foreign exchange rates.

The multidistrict judicial panel said it is “confident” that Judge Gardephe will “steer this litigation on a prudent course.”

Reporting by Sarah N. Lynch in Washington; additional reporting by Suzanne Barlyn in New York; Editing by David Gregorio

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