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Financial companies settle GSE bond rigging suit for $250M

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Financial companies settle GSE bond rigging suit for $250M

Pennsylvania Treasurer Joe Torsella announced that 12 companies that have been named defendants in a price-fixing lawsuit involving bonds issued by Fannie Mae and Freddie Mac have agreed to settle the case for $250 million.

The companies were sued for allegedly conspiring to manipulate the prices of the government-sponsored entities' bonds between 2009 and 2016.

The defendants in this latest settlement are BNP Paribas Securities Corp., Cantor Fitzgerald & Co., Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, HSBC Securities (USA) Inc., J.P. Morgan Securities LLC, Merrill Lynch Pierce Fenner & Smith Inc., Morgan Stanley & Co. LLC, Nomura Securities International Inc., SG Americas Securities LLC, TD Securities (USA) LLC and UBS Securities LLC.

Four of the original 16 defendants — Deutsche Bank Securities Inc.; First Tennessee Bank, which rebranded as First Horizon; Goldman Sachs & Co. LLC; and Barclays Capital Inc. — have already separately reached settlement agreements in relation to the lawsuit. Barclays, which is the biggest underwriter of the bonds, will pay $87 million, while Deutsche Bank, Goldman Sachs and units of First Horizon agreed to settle for a combined $49.5 million, Reuters reported.

"The evidence in this case was particularly damning. The brazen attitude exhibited by Wall Street traders toward public institutional buyers of GSE bonds was shocking," Torsella said in a news release.

Under the settlement, the defendants agreed to establish and maintain an antitrust compliance program.