Eight giants in the legacy financial system have agreed to pay a $68 million settlement after facing nearly a decade of litigation over a price-fixing scandal.
Bank of America, Barclays Capital Inc., BMO Financial Corp., William Blair & Co. LLC, Citigroup Inc., Fifth Third Bancorp, JPMorgan Chase & Co. and Morgan Stanley were all accused of illegally colluding with each other to inflate the interest rates of certain municipal bonds in order to discourage investors from returning them for cash.
The banks were expected to go to court on August 7, but Judge Thomas Donnelly approved an emergency order sought by the defendants to avoid the trial in favor of the settlement.
Bloomberg reports that at a Monday hearing, lawyers representing Edelweiss Fund, which brought a whistleblower lawsuit against the banks in 2014, argued that it deserved at least double the amount of the settlement money.
Donnelly was apparently not convinced, and told the plaintiffs that they were free to argue the size of the settlement at a September 15th briefing.
None of the banks involved have responded to media inquiries regarding the settlement.
Elliot Stein, an analyst at Bloomberg Intelligence, says that the settlement that the banks have agreed to is roughly one fifth of the $349 million in damages sought by the plaintiffs.
“That’s a pretty good outcome for the defendant banks, especially if spread across the 8 of them. And it signals that the other False Claims Act cases in California, New York and New Jersey are manageable for the banks too if they’re unable to prevail on some of their remaining defenses.”
The outcome is the latest in a series of fines, settlements and scandals facing traditional financial institutions.
JPMorgan in particular is nearing the $39 billion mark in total fines imposed by US regulators, enforcement agencies and lawsuits related to anti-competitive practices, securities abuses and other violations.
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