ISDAFix Price-Fixing Litigation (Alaska Electrical Pension Fund v. Bank of America)

On October 20, 2014, Labaton Sucharow filed a class action on behalf of purchasers of interest rate derivatives (IRDs) whose value was tied to or impacted by the setting of ISDAfix, a key benchmark in the IRD market. ISDAfix was designed to be a bona fide way of assessing conditions in the IRD market by asking a panel of banks—defendants here—the price at which they could purchase or sell swaps in the open market. The Firm serves as class counsel in the case and is one of only a few firms responsible for litigating the case.

The action alleges that a group of major dealers, along with an interdealer broker, colluded to manipulate the ISDAfix benchmark for the purpose of enriching themselves to the detriment of the class. That manipulation principally took two forms and lasted for years. First, the dealers engaged in trading activity around 11:00 a.m. that was designed to manipulate an ISDAfix reference rate that the interdealer broker published each day. The broker’s employees were fully aware of the dealers’ attempts to manipulate and would often assist them in doing so. Second, rather than exercising independent judgment about where their submission should be, the dealers—again with the broker’s knowledge and participation—corrupted that process by routinely rubber-stamping the ISDAfix reference rate so that the manipulated reference rate would become the published ISDAfix for the day.

Victims of this manipulation are investors who entered, settled, or terminated IRDs such as swaps and swaptions, including many pension funds who regularly engage in IRD transactions.

The plaintiffs have secured $504.5 million in total settlements with all defendants.

The case is Alaska Electrical Pension Fund et al v. Bank Of America Corporation et al., No. 14-cv-07126 (S.D.N.Y). Labaton Sucharow represents Genesee County Employees' Retirement System.