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Goldenberg Schneider Files Antitrust Class Action Against U.S. Treasury Dealer Banks

Goldenberg Schneider has joined forces with attorneys from Spector Roseman Kodroff & Willis, PC, Lockridge Grindal Nauen PLLP, Freed Kanner London & Millen, LLC, Glancy Prongay & Miller LLP,  and Lite Depalma Greenberg, LLC, in bringing a putative class action against many of the nation’s largest dealers of U.S. Treasury securities for violating the Sherman Act, Clayton Act, Commodity Exchange Act, and state common law.  The defendant dealer banks include Barclays Capital Inc., Citigroup Global Markets Inc., J.P.Morgan Securities LLC, and Morgan Stanley & Co. LLC, among others.  The complaint alleges that the defendant banks abused their position as primary dealers in the market for Treasury securities, subverted the proper operation of the Treasury securities market, and colluded to manipulate the Treasury Department auctions and pricing of Treasury securities in the “when-issued market.”  More specifically, the complaint alleges that the defendants used electronic chatrooms, instant messaging, and other electronic and telephonic methods to exchange confidential customer information, coordinate trading strategies, and increase the bid-ask spread in the when-issued market to inflate prices of Treasury securities they sold to the Class.  The complaint similarly alleges that the defendants used the same means to rig the Treasury auction bidding process to deflate prices at which they bought Treasury securities to cover their pre-auction sales. 

Plaintiff alleges that as a result of the defendants’ unlawful manipulation of the Treasuries market, the prices of when-issued Treasury securities were artificially high and the prices of Treasury securities at auction were artificially low.  In a competitive market not manipulated by Defendants, prices (yields) of Treasury securities generally tend to be higher (lower) in the when-issued market than prices tendered at auction.  This conduct maximized the defendants’ profits at the expense of their customers and others in the market.

The action is currently pending before Judge Paul G. Gardephe, United States District Court for the Southern District of New York.

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