Big banks will now pay a whopping $500m for short selling violations according to the latest report conducted by Bloomberg.
Goldman Sachs Group Inc, Morgan Stanley, JPMorgan Chase & Co and UBS AG have agreed to pay $499 million to settle an antitrust class action by US pension funds over the banks’ control of the market for stock loans used for hedging and short selling.
Credit Suisse last year agreed to pay $81 million to settle the claims against it.
The four banks also agreed to cooperate in the litigation against Bank of America Corp, the sole remaining defendant, according to a Wednesday court filing by the pension funds in Manhattan federal court.
The court filing also revealed that Goldman, Morgan Stanley, JPMorgan and UBS continue to deny any wrongdoing despite agreeing to settle.
The August 2017 lawsuit accused the major banks of colluding to hinder the development of all-electronic trading systems that match lenders and borrowers of stock, while also using EquiLend, a joint-venture trading and clearing service, as the forum for collusion, per Proactive Investors.
The plaintiffs were led by Iowa Public Employees’ Retirement System.
“By facilitating the ability of the stock lending market to become more competitive and transparent, plaintiffs believe that these reforms generate significant value for both existing class members and future borrowers and lenders in the stock lending market,” the pension funds wrote in the filling.
The settlement still requires a judge’s approval.
Other Banking News Today
The 25 largest US banks are now seeing a record plunge in deposits according to the latest study conducted by the Federal Reserve Economic Data (FRED).
According to the FRED data, between July 5 and the most current reading on July 26, the 25 largest U.S. banks saw a plunge of $174 billion in deposits.
Deposits at the 25-largest domestically-chartered U.S. commercial banks peaked at $11.680 trillion on April 13, 2022, according to the updated H.8 data maintained at the Federal Reserve Economic Database.
As of the most current H.8 data for the week ending on Wednesday, July 26, 2023, deposits stood at $10.709 trillion at those 25 commercial banks, a dollar decline of $970 billion and a percentage decline of 8.3 percent.
In fact, small banks have performed better than big banks in terms of inflow.
Despite all of the misleading news reports about depositors seeking out the perceived safety of the largest banks since the banking crisis in the spring, it’s actually been the smaller banks that have staged a comeback on growing deposits since the week of April 26,” says Wall Street on Parade.
“This breakdown does not give the American people a quick pulse beat on the dangers lurking in the U.S. banking system – a system that imploded in 2008 and was on its way to imploding again this spring until the Fed stepped in with another bailout program. In the span of seven weeks this spring, running from March 10 to May 1, the second, third, and fourth largest bank failures in U.S. history occurred.
In order of size, those were: First Republic Bank (May 1), Silicon Valley Bank (March 10) and Signature Bank (March 12). The largest bank failure in U.S. history, Washington Mutual, occurred in 2008 during the financial crisis.
Because there are only four domestically-chartered commercial banks in the U.S. with more than $1 trillion in deposits – JPMorgan Chase, Bank of America, Wells Fargo, and Citigroup’s Citibank – it behooves Americans to closely monitor what is happening at these four banks, which hold such a highly concentrated share of the banking system’s deposits and assets.
That is especially true given that one of those four banks, Citigroup, blew itself up in 2008 and received the largest Fed and Treasury bailout in U.S. banking history.”
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