A new lawsuit has been filed against a large number of the leading banks in the United States, including Bank of America, J.P. Morgan Chase & Co., Merrill Lynch, Morgan Stanley, and Goldman Sachs. The lawsuit alleges that the banks manipulated the stock short sale market to prevent new, more transparent stock lending practices that cut out the middleman and increase competition in the marketplace and deny investors access to open exchanges not controlled by the banks.
If you, your pension, retirement fund, or investment manager used Equilend or were affected by inflated stock lending fees, you may have a claim. We would like to speak with you about your claim as we are building a case against a number of banks that may have denied you a fair and open marketplace for stock lending.
What is the Equilend Stock Loan Class Action About?
Banks act as middlemen for stock lending between lenders and borrowers, often pocket large fees in the process of facilitating lending. Equilend, a service that matches borrowers with lenders, is a little know but lucrative service owned by a number of banks.
By comparison, European systems have an direct, all-to-all stock lending program that some American investment managers pushed for a few years ago—only to be shut down by banks that allegedly refused to meet modern demands for technological improvements seen elsewhere in the world. In the past when stock lenders and borrowers have tried to move away from Equilend and similar services, banks allegedly refused to allow more modern technology that allows for more transparency in fees.
The plaintiffs for the class action, including the Iowa Public Employees’ Retirement System (IPERS), the Orange County Employees Retirement System and the Sonoma County Employees’ Retirement Association, allege that banks intentionally manipulated the market to benefit, at the cost of fair trading for their plans.
In other similar cases, after judge certification the class, the cases settled for millions. In 2013, Countrywide Financial settled with Iowa’s pension fund for $500 million over alleged abuses in the packaging and selling of mortgage bonds that soured in the financial crisis.
For brokers and pensioners alike, reducing the amount of fees paid to third parties for stock lending would increase profits from the trades, allowing for hedge fund managers and those they trade for to be able to see higher returns on their investments. Holding the banks accountable for manipulating the marketplace will help reduce the burden of out of date and old-fashioned fee structure imposed by banks.
We want to speak with you if you believe you may have a claim or have been affected by Equilend’s practices or managed a fund that uses Equilend’s services.