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Investor lawsuits pile up claiming U.S. Treasury market is rigged

Section: Daily Dispatches

By Joe Rennison
Financial Times, London
Monday, September 28, 2015

NEW YORK -- Investors have filed a flurry of court cases claiming banks and brokers have been rigging the Treasury bond market and increasing the cost of selling debt for the US government.

Twenty-three related cases have been filed so far, alleging the primary dealers that underwrite the US government's debt colluded to manipulate the price of US Treasuries to their benefit. US Treasury securities are sold through an auction process in which banks and brokers listed as "primary dealers" place bids for the number of bonds they wish to buy and at what price. Investors can use primary dealers to buy at the auction or purchase them directly.

Lawyers say two further cases are also being filed, taking the total to 25. Both the Department of Justice and the New York State Department of Financial Services are separately in the early stages of looking into potential manipulation in the market.

While there are some details that differ between the cases, lawyers for the plaintiffs expect they will be combined into one, with lead counsel likely to be appointed by the end of October.

"The Treasury auction itself was rigged," says Gregory Asciolla, a partner at law firm Labaton Sucharow, which is lead counsel in two cases for State-Boston Retirement System and Arkansas Teacher Retirement System. "But it is broader in that we allege as well that the when-issued market was rigged and manipulated." ...

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