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January 2019: Victory for Investors in “ISDAfix” Antitrust Class Action

January 2019

After four years of painstaking work by Quinn Emanuel on behalf of a class of investors in the market for interest rate derivatives, Judge Furman of the Southern District of New York recently gave final approval to settlements in excess of $500 million in our “ISDAfix” case, Alaska Electrical Pension Fund v. Bank of America N.A., No. 14-cv-7126 (S.D.N.Y).

ISDAfix is a global benchmark used to value a range of interest rate derivatives. Quinn Emanuel brought the case on behalf of investors such as insurance companies, pension funds, hedge funds, and other sophisticated actors, against 14 large investment banks and their interest rate swaps broker-dealer. We built the case from the ground up, after noticing anomalies which suggested that various interest rate derivatives were not being priced in accordance with natural market forces, and for years worked to achieve results ahead of government regulators such as the CFTC.

Achieving the settlements required Quinn Emanuel to develop a number of novel legal theories and to exercise tenacity in our pursuit of the relevant evidence. For example, as class counsel we had to find traders who worked at the various bank defendants explicitly admitting that they were interested in or had attempted to manipulate the ISDAfix benchmark. We then had to match those admission to trades conducted by the bank for whom the traders worked, at the right time of day, and consistent with the method and intended direction of the manipulation described. We then had to demonstrate that the manipulative trades had an impact on prices in the relevant derivatives markets such that class members were harmed by the wrongdoing, in some instances hours or even days later.

In approving the settlements, the experienced jurist Judge Furman described the case as “the most complicated” he had ever faced, and observed that he could “not really imagine” how much more complicated “it would have been if I didn’t have counsel who had done as admirable a job in briefing it and arguing it” as Quinn Emanuel had done.

The case is significant for a number of reasons. In respect of the amount recovered for the class—over $500 million—it stands alone as one of the most significant recoveries in an antitrust class action proceeding. The fact that the proceeding survived motion to dismiss was testament to the force of Quinn Emanuel’s data and statistics-centric approach to pleading and proving complex market manipulation cases. And the fact that Quinn Emanuel achieved this result by remaining—throughout—ahead of regulators seeking to punish the same type of wrongdoing, demonstrates Quinn Emanuel’s preeminent position as a force among the plaintiffs’ bar, capable of achieving appropriate redress for defrauded investors on an industry-wide scale.