UBS

13 Global Banks Sued by Alaska Fund for ISDAfix Rigging - Analyst Blog

Legal hassles continue to trouble major global banks. Alaska Electrical Pension Fund has filed a lawsuit in the U.S. District Court, Southern District of New York, suing as many as 13 international banks. The lawsuit pertains to the banks' alleged manipulation of ISDAfix rates, a benchmark used to appraise interest rate derivatives, commercial real estate mortgages and structured debt securities.

The sued banks include JPMorgan Chase & Co. ( JPM ), Bank of America Corp. ( BAC ), Citigroup Inc. ( C ) and HSBC Holdings Plc ( HSBC ). Per the lawsuit, the banks colluded to rig ISDAfix rates by rapidly executing trades just before the rate was supposed to be determined and delaying the processing of trades until it was fixed. This allowed the banks to manipulate the payments made to investors on derivative trades.

Such action adversely impacted approximately $170 trillion worth of financial instruments tied to ISDAfix rates. The lawsuit seeks unspecified damages for violating the U.S. antitrust and commodities laws.

Other defendants in the case are Barclays PLC ( BCS ), BNP Paribas SA ( BNPQY ), Deutsche Bank AG ( DB ), Credit Suisse Group AG ( CS ), The Goldman Sachs Group, Inc. ( GS ), Nomura Holdings, Inc. ( NMR ), The Royal Bank of Scotland Group plc ( RBS ), UBS AG ( UBS ) and Wells Fargo & Company ( WFC ). Even the U.K.-based ICAP Inc., the former administrator for ISDAfix rate, is a defendant.

If proven guilty, the banks would undoubtedly suffer a setback due to mounting legal expenses which would negatively impact their financials. On the other hand, an appropriately landmark judgment regarding such manipulative practices will bring justice to sufferers.

Nonetheless, this is not the first time that the major banks have been accused of manipulating rates. Several banks including BofA, Citigroup, JPMorgan, Barclays and HSBC have been sued previously for their alleged role in manipulating the London Interbank Offered Rate (LIBOR).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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