Goldman, JPMorgan, Morgan Stanley & UBS to Pay $499M to Settle Stock-Lending Suit

What You Need to Know

The antitrust class action was bought by the Iowa Public Employees’ Retirement System and other pension funds.
The 2017 lawsuit accused the major banks of colluding to hinder the development of all-electronic trading systems that match lenders and borrowers of stock.

Goldman Sachs Group Inc., Morgan Stanley, JPMorgan Chase & Co. and UBS AG agreed to pay nearly $500 million to settle an antitrust class action by U.S. pension funds over the banks’ control of the market for stock loans used for hedging and short selling.

According to a Wednesday court filing by the pension funds in Manhattan federal court, the four banks agreed to pay $499 million and also cooperate in the litigation against Bank of America Corp., the sole remaining defendant.

Credit Suisse AG last year agreed to pay $81 million to settle the claims against it.

Despite agreeing to settle, Goldman, Morgan Stanley, JPMorgan and UBS continue to deny any wrongdoing, according to the filing.

The plaintiffs, led by Iowa Public Employees’ Retirement System, asked U.S. District Judge Katherine Polk Failla to preliminarily approve the settlement as “fair, reasonable, and adequate.”

The 2017 lawsuit accused the major banks of colluding to hinder the development of all-electronic trading systems that match lenders and borrowers of stock.

Banks typically locate shares that trading clients are looking to short and then loan them the stock, usually through their prime brokerage units. The suit focused on the banks’ participation in EquiLend, a joint-venture trading and clearing service.