Banks tentatively agree to $1.87-billion antitrust settlement

Twelve major banks have tentatively agreed to pay $1.87 billion to settle allegations that they colluded to fix prices and lock out competitors in the market for insurance-like products widely traded before the financial crisis, according to a lawyer for investors.

The deal, if finalized, would be one of the largest U.S. antitrust settlements, said Daniel Brockett, a lawyer representing a Los Angeles pension fund, Los Angeles County Employees Retirement Assn., among other plaintiffs. He said the final terms needed to be hammered out, and a judge would still need to approve the deal.

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Bank of America, JPMorgan Chase, Citigroup and other banks met secretly to kill proposals that would put the trading of these insurance-like products onto an exchange through which they could be bought and sold like stocks and their prices made more transparent, according to a complaint filed in U.S. District Court in New York.

In keeping trading private in a “rigged” market, the banks cheated investors out of billions of dollars, the complaint alleges. An investor “basically had to pay what they wanted,” said Brockett, a partner at Quinn Emanuel Urquhart & Sullivan.

The banks have denied allegations of wrongdoing. They do not face criminal charges.

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