Alternative Investment

Stock Loan Activities Antitrust Case Settles For $580 Million

We are honored to partner with experts in the industry and proud to showcase this post from Battea Class Action Services. 

The class action mechanism is an important procedural tool. In 2023 alone, there were 228 new federal securities class action suits filed, an increase from 206 cases filed in 2022. While shareholders, companies, and judges have been settling securities class actions for years, some of these particular agreements stand out because of their immense monetary value.

The litigation process for a securities class action case can take years from when the litigation begins and until a settlement is reached. Therefore, it is important to stay abreast of settlements as they occur and determine if you need to take any additional steps if they apply to your firm.

The recent $580M Stock Loan Antitrust Settlement has a filing deadline of July 8, 2024. The summary below outlines the specifics of this case and potential next steps.

Stock Loan Case Summary

The suit alleged that since at least 2009, the Prime Broker Defendants have been working together to protect their profits through a company they control called EquiLend to prevent participants from accessing marketplaces where they could benefit from direct, all-to-all trading and thereby securing themselves the best prices. (All-to-all trading means that stock lenders can offer a stock to every other stock borrower in the market and select the best price.) Denying others this level of access forces trades in the market to go through their prime brokers, which is how the banks are able to reap tremendous financial benefit.

Who is Eligible?

All persons and entities who, directly or through an agent, entered into stock loan transactions with Bank of America, Goldman Sachs, Morgan Stanley, Credit Suisse, JP Morgan, or UBS in the United States from January 7, 2009 through August 22, 2023, (the Class Period) are eligible to file for this case.

The Settlement Details

As a result of additional bank settlements:

• The filing deadline is July 8, 2024.
• The settlement fund has increased from $81 million to $580+ million.
• The class period has been expanded: Jan. 7, 2009, through Aug. 22, 2023.

Eligible Instruments

“Stock Loan Transactions” means any transaction, including any transaction facilitated by a prime broker, agent lender, or other Person, in which a holder of a stock temporarily lends the stock in exchange for collateral or in which a borrower of a stock provides collateral to temporarily borrow a stock, and in which the stock is ultimately returned to the lender at a later date, at which time the lender returns the collateral to the borrower. For the avoidance of doubt, “Stock Loan Transactions” include the facilitation of short positions, but do not include non-equity securities lending or stock repurchase (repo) transactions.

Next Steps

Battea Class Action Services has established a team to help firms determine if they are eligible to participate. Once confirmed, Battea will perform recovery services on a contingency basis. Contact Bob Williamson at Battea Class Action Services for more information.

Understanding what is on your horizon is important to us at Richey May, and we will share similar important news as it happens. Have any additional questions? Email Steve Vlasak, Richey May’s Business Development Partner, Alternative Investments Practice.