JPMorgan and Barclays Settle Over Mexican Bond Rigging

Published On June 8, 2020

JPMorgan Chase & Co and Barclays Plc were the first of nine banks amidst a recent banking collusion scandal to settle in a proposed class-action litigation. Other defendants yet to settle include affiliates of  Banco Santander, Bank of America, BBVA, Citigroup, Deutsche Bank, HSBC, and UBS. Investors claim that these industry leaders conspired to rig the Mexican government bond market, forcing the banks to agree to what lawyers hoped to be “ice breaker” settlements intended to trigger more to accept responsibility for misconduct. 

In the District Court’s filing in Manhattan a week ago, JPMorgan Chase & Co and Barclays Plc agreed to settlements totaling $20.7 million. Broken down, the settlement requires JPMorgan to pay $15 million, and $5.7 million from Barclays, which the banks hope resolves the investors’ claims of widespread bank collusion. Both denied wrongdoing in agreeing to settle outside court.

Investors backed by several pension funds accused the defendant banks of operating as a “cartel” from January 2006 to April 2017. Over that period, they were found sharing pricing and other transaction data with external entities through unmonitored communication channels, including chat rooms, to maximize their profits at the investors’ expense. Mexico’s antitrust watchdog, the Federal Economic Competition Commission (COFECE), made the private litigation that occurred last October feasible after it began a probe into possible collusion, which unearthed mountains of evidence. 

However, much like the previous banking lawsuit dismissed last September, Monday’s settlement first requires approval by U.S. District Judge Paul Oetken, who has given investors another chance to amend their complaint. Without his approval, efforts to reduce collusion in the banking industry will be nullified. The case is In re Mexican Government Bonds Antitrust Litigation, U.S. District Court, Southern District of New York, No. 18-02830. For now, the banks, investors, and industry leaders hold their breath in anticipation of the ruling.