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State Attorney General Files Suit Charging Wall Street Mega Banks with “Multi-Year Bid Rigging and Price Fixing” Conspiracy in Credit Default Swaps Market

Courtesy of Pam Martens

David E. Kobel, Managing Partner, Kirby McInerney, One of the Lawyers Representing the New Mexico State Investment Council

David E. Kobel, Managing Partner, Kirby McInerney, One of the Lawyers Representing the New Mexico State Investment Council

Last week the New Mexico Attorney General’s office filed a breathtaking, 128-page anti-trust lawsuit in federal court in New Mexico on behalf of the state’s $31 billion investment fund, the New Mexico State Investment Council. The Council manages a permanent endowment along with money for 23 state agencies.

The lawsuit alleges, backed by striking evidence, that the following banks have engaged in a 16-year conspiracy of “bid rigging and price fixing” in the Credit Default Swap (CDS) market: Bank of America/Merrill Lynch; Barclays; BNP Paribas; Citigroup; Credit Suisse; Deutsche Bank; Goldman Sachs; JPMorgan Chase; Morgan Stanley; and RBS.

The lawsuit also names a swaps trade association, the International Swaps and Derivatives Association (ISDA), as a defendant, noting that a “majority of ISDA’s board members” are employed by the bank defendants. The lawsuit characterizes ISDA as a “front organization.” Two other companies involved in the allegedly rigged Credit Default Swap protocol are also named: Creditex and Markit. The lawsuit draws attention to the fact that “Until mid-2014, Markit was majority-owned and controlled by a consortium of approximately 16 investment banks,” including each of the bank defendants (along with HSBC and UBS) who sat on its board of directors.

As fascinating as the details of the alleged price fixing are in the lawsuit, equally fascinating is the name of the outside law firm that is representing the plaintiff, the New Mexico State Investment Council. That law firm is Kirby McInerney, which has a history of representing whistleblowers in frauds committed by Wall Street miscreants. The law firm’s name jumped out at us because the extremely intimate and comprehensive details of how this alleged fraud was conducted, as outlined in the lawsuit, sounds uncannily like the work of an insider who is now blowing the whistle.

The general outline of the conspiracy is described as follows in the lawsuit:

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