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Victory: December 2015: Historic $1.87 Billion Antitrust Victory

December 2015

In one of the largest private antitrust settlements in history, Judge Denise L. Cote of the Southern District of New York preliminarily approved a $1.87 billion settlement in a credit default swaps (“CDS”) case in which Quinn Emanuel represented the plaintiff class. The class is made up of investors in CDS, including pension funds, university endowment funds, hedge funds, insurance companies, corporate treasuries, fiduciary and  depository institutions, small banks, and money managers.  The court appointed Quinn Emanuel, along with Pearson, Simon &  Warshaw, LLP, as co-lead counsel for the class in late 2013. In other words, it only took two years for private litigants to achieve  a multi-billion dollar settlement even though both the Department of Justice and the European Commission had  been investigating the same claims since 2009, but had not yet taken any action against a single bank dealer defendant. In just two years, Quinn Emanuel filed a complaint, defeated defendants’  motions to dismiss, and moved forward with an aggressive discovery schedule that involved the review of millions of documents and the depositions of over thirty witnesses. The firm also prepared and was ready to file class certification papers, including  several expert declarations in support  of class certification, but the defendants pulled the plug and settled the case on the eve of the deadline to file for class certification. As Judge Weinstein (Ret.) stated in a sworn declaration submitted in support of the settlement, in his 30 years of mediating complex disputes, “this was one of the finest examples of efficient and effective lawyering that I have ever witnessed.”

The case involved allegations that  twelve Wall Street banks conspired between themselves and industry fixtures International Swaps and Derivatives Association and Markit, to ensure that CDS continued to be traded in the opaque “over-the-counter” market that the banks dominated, with 95% market share. They did this by collectively blocking  the emergence of trading platforms that would, for instance, have allowed buy-side members to trade CDS with each other rather than  having to  always go through a dealer. For instance, in 2008 the Chicago Mercantile Exchange and Citadel Investment Group attempted to launch “CMDX,” a platform that would have had such exchange-like features. But the defendants prevented it from doing so by, among other things, conspiring to prevent CMDX from obtaining the licenses needed for it to launch.

This is an important victory for the class that, if approved by the court, will result not only in substantial recoveries for class members (not just collectively but also, unlike in many class-actions, often individually as well), but also will help reform the CDS market going forward. The settlements include valuable injunctive relief that will help ensure the CDS market is allowed to evolve freely.