U.S. funds file suit alleging banks' collusion in Mexico bond market

MEXICO CITY (Reuters) - Two U.S. pension funds filed a proposed class action in New York on March 30 against financial institutions in the market for Mexican government bonds, alleging they conspired to fix prices.

The lawsuit was filed by the Oklahoma Firefighters Pension & Retirement System and the Electrical Workers Pension Fund Local.

The banks named in the lawsuit are Banco Santander, Banco Bilbao Vizcaya Argentaria, JP Morgan Chase & Co, HSBC, Barclays, Citigroup, Bank of America and Deutsche Bank.

The lawsuit, first reported by Mexican newspaper Reforma, stems from an investigation announced by the Federal Commission for Economic Competition, or Cofece, in April 2017, into possible breaches of competition laws in the public debt market.

The case, which Cofece described as its largest probe to date into public debt sales, reflects the Mexican government’s halting efforts to increase market oversight.

The lawsuit comes amid a wave of private litigation in New York federal court accusing big banks of conspiring to fix interest rate benchmarks and prices for bonds, commodities and currencies at ordinary investors’ expense.

Spokesmen for Barclays and JP Morgan and a spokeswoman for Citi declined to comment. The other banks did not immediately respond to requests for comment.

The pension funds, which said in the complaint that they had purchased tens of millions of dollars’ worth of Mexican government bonds, allege that they overpaid as a result of the banks’ pricing scheme.

The pension funds allege that prices for the bonds rose significantly after Cofece announced its investigation, suggesting the banks had been colluding previously.

Vincent Briganti, a lawyer for the plaintiffs, declined to comment further on the case.

Reporting by Julia Love and Joseph Ax; additional reporting by Jonathan Stempel; Editing by Bernadette Baum