Wednesday, November 22, 2017

Funds enlist Vendors to Hike the Stakes in $50 billion Class Action vs Dealers

First Impressions of amended complaint shows counsel got advice from data vendors.

A putative class action suit filed in August 2017 alleges that U.S. investment banks and broker-dealer units of global banks conspired to restrain competition in the domestic stock lending markets. (Read our review here.) The fact that a Connecticut hedge fund and Los Angeles County’s pension system have joined the suit is the development that has captured the media headlines. However, the risk to banks’ profits is the real story here.

Wednesday, October 25, 2017

Treasury Plans Broad Industry Role in Regulatory Policy

Financial firms to be more involved in "America First" rule-making

Following up on the publication of its first banking policy report in June, the U.S. Treasury released two more reports on Capital Markets and Asset Management. From the tone of all the reports, it’s clear that Treasury intends to lead the regulatory agencies of the executive branch into a new era of consultative rule-making, with the industry taking a more active role than it has over the last several years. It’s also clear that the Treasury will move to reverse the impact of the Dodd-Frank Act, not only through an attempt at legislative repeal, but initially by unwinding the cocoon of new regulations that the Act imposed on financial firms.

Monday, August 28, 2017

Fed Chair Rejects Regulatory Roll-back

Financial Reforms Should be Refined, Not Repealed

Federal Reserve Chairwoman Janet L. Yellen strongly defended post-crisis financial reforms, saying that new regulations have strengthened the U.S. financial markets and wholesale roll-back would be unwise. In remarks delivered at a symposium sponsored by the Fed in Jackson Hole, Wyoming Yellen made the case for the success of these reforms, summarizing indicators and research that show the improved resilience of the U.S. financial system, due, she said,  "importantly to regulatory reform as well as actions taken by the private sector.” She also addressed "evidence regarding how financial regulatory reform has affected economic growth, credit availability, and market liquidity.”

Tuesday, August 22, 2017

Pension Funds File Sweeping Securities Lending Class Action

Allege collusion by the largest prime brokers

Three U.S. pensions have filed a class action suit against the largest prime brokers alleging collusion to fix fees and stifle competing electronic platforms in securities finance. This suit follows the theme of other class actions involving allegations of collusion and manipulation amongst the biggest global banks in relation to LIBOR, municipal bonds, Forex, and interest rate swaps. The suit filed was filed August 16, 2017 in the US Southern District Court of New York as an anti-trust action by the Iowa Public Employees’ Retirement System, Orange County Employees Retirement System, and Sonoma County Employees’ Retirement Association. The unusually detailed yet virtually unsourced complaint alleges that six major lending agent banks created a “working cartel” to capture 76 percent of securities lending business, force out competing platforms, and inflate fees.  

Monday, August 14, 2017

Fed President Sees Rebound in Inflation and Modest Wage Growth

Officials reinforce Fed's gradual policy-tightening plan

New York Federal Reserve President and CEO William Dudley says he and his Fed colleagues anticipate U.S. inflation to rise gradually over the next several months as the labor market is expected to continue heating up. These trends, Dudley says, support the Fed’s near-term policy tightening. In the New York Fed's August 10, 2017 Regional Economic Press Briefing, Dudley called on the United States to better address factors driving racial inequality of employment and income, and he also suggested the Fed was planning to raise interest rates once more and begin reducing some bond holdings this year.