Four major banks, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and UBS, have agreed to pay a total of $499 million to settle a shareholder lawsuit accusing them of conspiring to weaken competition. The lawsuit alleged that the banks violated antitrust laws by blocking the modernization of the securities lending market, which handles around $2.7 billion. The settlement, which still needs to be approved by a court, requires the banks to cooperate with the group of investors who brought the lawsuit. Bank of America, another defendant in the case, is not part of the settlement.
The shareholders claimed that the banks used their control of the EquiLend company to maintain a monopoly by boycotting investors who used other lending platforms with lower fees. This allegedly left investors reliant on an “outdated market structure” and forced them to pay excessive fees to the banks. EquiLend, which is owned by the banks involved in the settlement, has also agreed to implement a code of conduct against monopolistic practices and is cooperating in the ongoing lawsuit against Bank of America.
The investors initially filed the lawsuit in 2017 and had previously reached a settlement in 2022 with Credit Suisse, now part of UBS, for $81 million. The total compensation for the plaintiffs in this case, pending the outcome with Bank of America, is expected to be $580 million. This case is one of the largest in the last decade involving allegations of monopolistic actions.
The plaintiffs’ lawyers welcomed the partial resolution of the case and emphasized their commitment to holding Bank of America accountable as the lawsuit progresses. The settlement has yet to be approved by the court.