Credit Default Swap (“CDS”)
Keller Rohrback L.L.P. is investigating potential antitrust violations against 13 major banks, and certain entities allegedly controlled by those banks, for anti-competitive conduct designed to protect their ability to charge excessive bid-ask spreads in Credit Default Swap (CDS) trades. As part of our investigation, we are interested in speaking with investors that purchased and sold CDSs from any of the banks listed below. This investigation follows inquiries by the European Union competition authorities and the United States Department of Justice into the anti-competitive conduct associated with CDS trades.
The specific conduct at issue, that affects CDS purchases and sales, involves efforts to block certain exchanges, including the Deutsche Bourse and Chicago Mercantile Exchange, from entering this market. Allegedly, the 13 banks instructed Markit Group Ltd. (“Markit”) and the International Swaps & Derivatives Association (“ISDA”) to deny these potential competitors licenses to use their data to create their own exchange traded products. The alleged result was to maintain an opaque Over-The-Counter market where the bank-dealers could exploit the lack of transparent pricing information to inflate the amount they were able to charge for CDS trades, rather than allow the development of an open exchange where all traders would have equal access to transparent pricing information. In light of the fact that the trade in CDS amount to trillions of Euros every year, even a relatively small inflation of the bid-ask spread, when applied to the aggregate transactions in such instruments, gives rise to billions of dollars in potential liability.
The potential bank-dealers that we are investigating are: Citigroup, Goldman Sachs, JPMorgan Chase, Credit Suisse, Deutsche Bank, Morgan Stanley, Barclays, HSBC, Royal Bank of Scotland, BNP Paribas, UBS, Merrill Lynch (now part of Bank of America), and Bear Stearns (now part of JP Morgan). In addition, entities through which these banks operated to exert their alleged illegal conduct were Markit, and the ISDA.