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Goldman Sachs settles bond-rigging lawsuit

Credit: REUTERS/David Gray

Goldman Sachs Group Inc agreed to pay $20 million to resolve claims by investors that it conspired to rig prices of bonds issued by Fannie Mae and Freddie Mac.

NEW YORK, Nov 15 (Reuters) - Goldman Sachs Group Inc GS.N agreed to pay $20 million to resolve claims by investors that it conspired to rig prices of bonds issued by Fannie Mae FNMA.PK and Freddie Mac FMCC.PK.

The preliminary settlement filed on Thursday night in federal court in Manhattan requires a judge's approval, and is the third in litigation by investors against 16 financial services companies.

Deutsche Bank AG DBKGn.DE settled for $15 million and units of Tennessee's First Horizon National Corp FHN.N settled for $14.5 million in September. Both settlements won preliminary court approval in October.

Goldman did not admit wrongdoing, and its settlement requires that it have strong antitrust compliance procedures.

Investors including Pennsylvania Treasurer Joe Torsella accused banks of exploiting their market dominance to overcharge for Fannie Mae and Freddie Mac bonds from Jan. 1, 2009, to Jan. 1, 2016, and keep more profit for themselves.

According to the investors, the defendants underwrote $3.97 trillion, or 77.2%, of Fannie Mae and Freddie Mac bonds in that seven-year period, with Barclays Plc BARC.L, JPMorgan Chase & Co JPM.N and UBS Group AG UBSG.S having the largest shares.

Fannie Mae and Freddie Mac guarantee more than half of U.S. mortgages, and have been in a conservatorship since taxpayers bailed them out in September 2008.

The case is In re: GSE Bonds Antitrust Litigation, U.S. District Court, Southern District of New York, No. 19-01704.

(Reporting by Jonathan Stempel in New York; editing by Jonathan Oatis)

((jon.stempel@thomsonreuters.com; +1 646 223 6317; Reuters Messaging: jon.stempel.thomsonreuters.com@reuters.net))

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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