Boston pension fund leads suit vs. banks over collusion

http://www.bostonherald.com/business/business_markets/2015/07/boston_pension_fund_leads_suit_vs_banks_over_collusion

Boston pension fund leads suit vs. banks over collusion
Saturday, July 25, 2015
Marie Szaniszlo

Boston’s municipal pension fund is the lead plaintiff in the first nationwide class-action lawsuit alleging a conspiracy by more than 20 of the world’s largest financial institutions to manipulate the prices of U.S. Treasury securities they sold to the fund and other investors.

In a complaint filed Thursday in federal court in Manhattan, lawyers for the pension fund allege that Goldman Sachs, Morgan Stanley, Citigroup and other companies colluded to induce the fund and other investors to pay high prices for debt securities in the pre-auction market and to depress the price of the securities the companies themselves bought at auction to cover these sales, pocketing the difference.

“The conspiracy we allege really has consequences for everyone,” said Michael W. Stocker, a partner at Labaton Sucharow, the New York law firm representing the pension fund.

Treasury securities not only are used to help finance U.S. government operations, but also are used by state and local municipalities, corporations, pension, investment and hedge funds, and individuals for investing and hedging purposes. Interest rates set by auctions for Treasury securities also are used as benchmarks for student loan debt, bonds, interest rate swaps and exchange-traded Treasury futures and options.