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12 Major banks to pay $1.87 B to settle price-fixing allegations!

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It is clearly time to have penalties other than fines for corporate criminals. It might be nice to see some of these folks in prison.

TWELVE major banks have agreed to pay “…$1.87 billion to settle allegations that they colluded to fix prices and lock out competitors in the market for insurance-like products widely traded before the financial crisis, according to a lawyer for investors.”  The deal, if finalized, would be one of the largest U.S. anti-trust settlements. SFGate continues:

Bank of America, JPMorgan Chase, Citigroup and other banks met secretly to kill proposals that would put the trading of these insurance-like products onto an exchange through which they could be bought and sold like stocks and their prices made more transparent, according to a complaint filed in U.S District Court in New York. In keeping trading private in a “rigged” market, the banks cheated investors out of billions of dollars, the complaint alleges.

“There was no central place to go for a stream of prices. You had to go to the banks and they controlled the business and they charged high prices,” said Brockett, a partner at Quinn Emanuel Urquhart & Sullivan. An investor “basically had to pay what they wanted.”

The banks have denied allegations of wrongdoing. They do not face criminal charges.

And THAT is the problem…. So long as the penalties are financial, they will merely be passed on to customers, and the illegal practices will continue. When executives know that they will face “jail time,” the illegal practices will stop, or at least decrease in magnitude and frequency.

Another defendant in the suit, the International Swaps and Derivatives Association, said in a statement that it is “pleased” that the case is close to resolution and that it is “committed to further developing CDS market structure to ensure the market functions safely and efficiently.”

CDS stands for credit-default swap, a product bought by investors to protect themselves in case governments or companies default on their debts.

The case against the banks involves swaps they handled starting in the fall of 2008, at the start of financial crisis when Lehman Brothers collapsed, triggering the biggest global economic downturn since the 1930s.

The case is before U.S. District Judge Denise Cote.

-Bill at

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