Three major public pension funds, including the Orange County Employees Retirement System, have sued a half-dozen Wall Street banks, alleging they illegally conspired to control a corner of the stock market, leading to higher charges for the funds and thus less money for retirees.
In a lawsuit filed Wednesday in U.S. District Court in New York, the funds allege Bank of America, Goldman Sachs, Credit Suisse, JPMorgan Chase, Morgan Stanley and UBS worked together since at least 2009 to "boycott, attack and acquire multiple entities" that tried to lower costs in the stock loan market.
That market is composed of institutions that lend stock to one another, a practice frequently employed by pension funds that allows for complicated financial transactions such as short selling and hedging.
Plaintiffs' attorney Michael B. Eisenkraft, a partner at Cohen Milstein Sellers & Toll, said the banks for years have colluded to maintain "their power over this little-known-but-lucrative corner of Wall Street."
"In doing so, they deprive investors of money that should flow to retirees, families and other hard-working Americans," he said in a statement.
Bank of America, Goldman Sachs, UBS, JPMorgan and Morgan Stanley declined to comment; Credit Suisse did not return a request for comment.
In a press release, the plantiffs' law firm alleged the banks used EquiLend, a stock lending platform they own, to "prevent participants from accessing marketplaces where they could benefit from direct, all-to-all trading and thereby secure themselves the best prices."
EquiLend declined to comment.
In addition to the Orange County Employees Retirement System, also known as OCERS, the Iowa Public Employees' Retirement System and the Sonoma County Employees' Retirement Assn. are plaintiffs in the lawsuit, which seeks class-action status.
As of the end of July, OCERS had more than $14.5 billion in assets under management and more than 42,000 active members and retirees, spokesman Robert Kinsler said.