NINE OF THE biggest banks won dismissal of a lawsuit claiming they rigged the market for bonds issued by government entities and institutions like the World Bank, after a judge said the investors who sued didn’t show how the alleged collusion caused them to pay higher prices for the securities.
Investors in the market for supranational, sub-sovereign and agency debt — often called SSA bonds — sued almost a dozen banks in 2016, alleging they fixed prices that were quoted to clients, steered business to one another and shared confidential information with each other. The market could range from $9 trillion to $15 trillion, according to data compiled by Bloomberg.
US District Judge Edgardo Ramos in New York tossed out the suit against the banks still remaining in the case — Barclays Bank Plc, Credit Agricole SA, Citigroup Inc., Credit Suisse Group AG, HSBC Holdings Plc, Nomura Holdings Inc., Royal Bank of Canada, Toronto-Dominion Bank and BNP Paribas SA. In a ruling posted Tuesday, Ramos said the investors had failed to show how any specific transaction had harmed them.
The plaintiffs presented Ramos with evidence of about 150 chats allegedly in which bankers and unknown counterparties allegedly discussed manipulating transactions, and asked the judge to infer that the transactions were tainted.
“This, by itself, is insufficient for the court to reasonably draw such an inference,” Ramos said.
It’s possible the suit may eventually survive, however. The judge said the plaintiffs could file a new complaint with more specific allegations — something that Dan Brockett, the plaintiffs’ lawyer, said they would do.
Bloomberg Intelligence analysts Jennifer Rie and Elliott Stein said the plaintiffs have a good chance of fixing the errors that were highlighted by Ramos in an amended complaint and defeating the next round of motions to dismiss the suit.
The banks either declined to comment on the decision or didn’t respond to messages seeking a response.
The claims in the suits resemble those made against banks over alleged manipulation of other markets, including currencies, interest-rate derivatives and precious metals, some of which have led to multibillion-dollar settlements, penalties and criminal prosecutions. Bloomberg has previously reported that the US Justice Department is conducting a criminal probe into whether the SSA market was rigged, and that regulators in the UK and Europe were also looking into the matter. At least three banks have disclosed receiving inquires on it from regulators.
SSA bonds are mostly illiquid and trade privately between banks and customers, which gives the financial firms an advantage when pricing them. The bonds have higher ratings due to guarantees they carry, and investors like them because they are perceived as higher-quality assets similar to government debt.
The judge didn’t rule on the merits of the case and said only that the investors had failed to file a sufficiently detailed complaint. Bank of America Corp. and Deutsche Bank AG previously agreed to pay a combined total of $65.5 million to settle the claims.
The case is In Re SSA Bonds Antitrust Litigation, 16-cv-3711, US District Court, Southern District of New York (Manhattan). — Bloomberg

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