Primary Dealers Rigged Treasury Auctions, Investor Lawsuit Says

Bloomberg Business
September 17, 2015

Michael W. Stocker explains how the Treasuries antitrust case stems from a clear conflict of interest

Experts interviewed by Labaton Sucharow LLP, the law firm that filed that suit, analyzed auctions and the market for when-issued securities, which are essentially agreements to buy or sell Treasury bonds, notes, or bills once they’re issued.

They claim that banks colluded to push prices artificially low at auctions, and to drive prices for when-issued securities to artificially high levels, until December 2012, when news broke of investigations into how Libor was set.

“These scenarios all turn on a very simple conflict of interest,” Labaton Sucharow partner Michael Stocker said. “You had banks who were auction participants who also had the power to move the prices that those markets depended on.”