Court Sustains Clients’ Antitrust Claims Against 11 Major Dealers in Interest Rate Swaps Antitrust Litigation

On July 28, 2017, Southern District of New York Judge Paul A. Engelmayer sustained federal and New York antitrust claims brought by the Firm on behalf of Javelin Capital Markets LLC and Tera Group, Inc. against 11 of the largest dealers of interest rate swaps (“IRS”), including Bank of America, Citigroup, Goldman Sachs, and JP Morgan. Javelin and Tera allege that the dealers conspired to boycott the anonymous all-to-all IRS trading platforms developed by Javelin and Tera in an effort to undermine competition in the IRS market. In his decision, Judge Engelmayer agreed with the arguments presented by the Firm’s attorneys that Javelin and Tera plausibly alleged that the dealers conspired to squash Javelin’s and Tera’s trading platforms, including refusing to deal, forcing clearing affiliates to deny clearing services, and threatening customers that used the platforms with loss of business or services. As described in the complaint, the defendants conspired to boycott Javelin and Tera because the platforms offered buy-side IRS customers more transparent and competitive IRS pricing, and thereby threatened the massive profits the defendants derive in the opaque IRS market that they control.

Judge Engelmayer similarly sustained related class action claims of IRS investors against the dealers for rigging the IRS market to boost profits and make IRS trading more costly. The class plaintiffs are represented by the firms Quinn Emanuel Urquhart & Sullivan, LLP and Cohen Milstein Sellers & Toll PLLC. Both actions are consolidated for pretrial purposes in In re Interest Rate Swap Antitrust Litigation, 16-md-2704 (PAE) (S.D.N.Y.).

A copy of the Judge Engelmayer's decision is available here.