Goldman Sachs, JPMorgan Chase, Morgan Stanley, and UBS will pay $499 million to settle an antitrust lawsuit from investors alleging they conspired to stifle competition in the stock lending market.
The settlement was revealed on Wednesday in a filing at the federal court in Manhattan. It necessitates a judge’s endorsement and also enforces alterations to the management structure of EquiLend, a joint venture involving the implicated parties.
The plaintiffs, led by four pension funds and a trading firm, alleged that the banks engaged in a conspiracy dating back to 2009 to hinder the stock lending market’s progress by boycotting emerging platforms, effectively pushing it backwards.
They asserted that the banks accomplished this by leveraging their positions on EquiLend’s board to uphold a monopoly grip on the market and impose overly high fees on investors. To date, investors have secured $580 million in settlements with five banks.
This includes an $81 million agreement in February 2022 with Credit Suisse, which UBS acquired in June.
The banks denied wrongdoing but settled to avoid the risk, cost and inconvenience of further litigation, court papers show.
Furthermore, they agreed to collaborate in the investors’ legal action against the last remaining defendant, Bank of America. The lawsuit started in August 2017.
As of September 2021, the Financial Stability Oversight Council of the U.S. Department of the Treasury approximated that global securities on loan amounted to $3.1 trillion.