A U.S. district judge dismissed investors' allegations against 10 major banks for colluding to overcharge on bond trading spreads

U.S. District Judge Valerie Caproni in Manhattan, New York, dismissed an antitrust lawsuit against 10 major banks, which accused them of colluding to manipulate corporate bond prices to the detriment of ordinary investors.

The defendants include Bank of America (BAC.US), Barclays, Citigroup (C.US), Credit Suisse, Deutsche Bank, Goldman Sachs (GS.US), JPMorgan Chase (JPM.US), Morgan Stanley (MS.US), National Westminster Bank, and Wells Fargo (WFC.US). Investors alleged that these banks overcharged billions of dollars in fees since 2006 in "odd-lot transactions," which involve fewer than 1,000 bonds or a value of less than $1 million. Investors claimed that these banks illegally charged spreads that were 25% to 300% higher than those for large "block trades," inflating profits.

The judge stated that investors failed to prove that the banks conspired to use the relevant platforms as "predatory operations" to hinder fair pricing while resisting competition that promotes fair pricing. Although the banks control about 65% of bond underwriting and 90% of corporate bond trading volume in the U.S., this does not imply that the defendants have the ability to control secondary market bond prices. The banks also did not exhibit any significant collusive actions in the four years prior to the lawsuit filed in April 2020