Banks settle swaps market manipulation case for $1.86 billion

A dozen major banks have agreed to pay nearly $2 billion in a class-action settlement concerning allegations of market manipulation dating back to the financial crisis, attorneys for investors who brought the lawsuit announced Thursday.

If approved by a judge later this month, the settlement could mean a payout of millions of dollars for a Los Angeles County employee pension fund and other plaintiffs, which argued that the banks conspired to reap unfair profits on trades of credit default swaps, a type of insurance for investors.

The deal calls for the defendants to pay $1.86 billion, which will be distributed to investors claiming they lost huge sums because of the...