Boston, MA 09/05/2014 (wallstreetpr) – Bank of America Corp (NYSE:BAC) had to pay a huge amount of $16.65 billion (approximate) to settle various claims that were put against it in relation with its involvement in false mortgage-backed securities case. A few days after that decision of the court, a federal judge on Thursday made an announcement. He said that investors could file lawsuits against the 12-large banking institutions which were found involved violating antitrust law by fixing mortgage-backed securities prices. These banks tried to restrain competition in the market for credit-price swap.
Denise Cote, U.S. District Judge said that investors had rights to file law-suit stating that these defendants swindled in such a way that investors had to pay unfair prices on credit default swap trades between 2008-2013.
Who are the major financial institutions involved in this issue:
There are twelve defendants in this case. They include Barclays Plc, Bank of America Corp (NYSE:BAC), BNP Paribas SA, Credit Suisse Group AG, Citigroup Inc, Deutsche Bank AG, HSBC Holdings Plc, Goldman Sachs Group Inc, JPMorgan Chase & Co, Royal Bank of Scotland Group Plc, Morgan Stanley and UBS AG. The court has also charged two other defendants who are active in credit derivative pricing services. These two financial institutions are Markit Ltd and International Swaps and Derivatives Association.
What is CDS:
CDS or credit default swaps are special types of contracts that protect investors against payment risk. In other words, they facilitate investors hedging against the risk that sovereign or debt issuers will not pay them according to conditions specified in the contract.
After-effects of Lawsuit against these financial institutions:
If the claims of several investors against these major financial institutions are found true, then they might have to pay tens of billions of dollars in penalty charges. None of the above mentioned twelve banks agreed to comment on this issue.
