UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS SHEET METAL WORKERS LOCAL NO. 33 CLEVELAND DISTRICT PENSION PLAN, Individually and on Behalf of All Those Similarly Situated, Plaintiff, vs. BANK OF AMERICA CORPORATION, BARCLAYS BANK PLC, BNP PARIBAS S.A., CITIBANK, N.A., CREDIT SUISSE GROUP AG, DEUTSCHE BANK AG, GOLDMAN, SACHS & CO., HSBC HOLDINGS PLC, INTERNATIONAL SWAPS AND DERIVATIVES ASSOCIATION, JPMORGAN CHASE & CO., MARKIT GROUP LTD., MORGAN STANLEY BANK, N.A., THE ROYAL BANK OF SCOTLAND GROUP PLC, and UBS AG, Defendants. Civil Action No. CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE FEDERAL ANTITRUST LAWS JURY TRIAL DEMANDED Case: 1:13-cv-03357 Document #: 1 Filed: 05/03/13 Page 1 of 52 PageID #:1
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UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
SHEET METAL WORKERS LOCAL NO. 33 CLEVELAND DISTRICT PENSION PLAN, Individually and on Behalf of All Those Similarly Situated,
Plaintiff,
vs.
BANK OF AMERICA CORPORATION, BARCLAYS BANK PLC, BNP PARIBAS S.A., CITIBANK, N.A., CREDIT SUISSE GROUP AG, DEUTSCHE BANK AG, GOLDMAN, SACHS & CO., HSBC HOLDINGS PLC, INTERNATIONAL SWAPS AND DERIVATIVES ASSOCIATION, JPMORGAN CHASE & CO., MARKIT GROUP LTD., MORGAN STANLEY BANK, N.A., THE ROYAL BANK OF SCOTLAND GROUP PLC, and UBS AG, Defendants.
Civil Action No. CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE FEDERAL ANTITRUST LAWS JURY TRIAL DEMANDED
Chatterjee of Citigroup, Andy Hubbard of Credit Suisse, Athanassios Diplas of Deutsche Bank,
Oliver Frankel of Goldman Sachs, Thomas J. Benison of JPMorgan, James Hill of Morgan
Stanley, and Paul Hamill of UBS.1
30. Various other entities and individuals unknown to Plaintiff at this time participated
as co-conspirators in the acts complained of, and performed acts and made statements that
aided and abetted and were in furtherance of, the unlawful conduct alleged herein.
V. THE CDS MARKET
A. Description of CDS
31. CDS are considered “derivatives” and are part of the OTC derivative industry. A
derivative is a financial contract linked to the future value or status of the underlying asset to
which it refers. Over-the-counter (“OTC”) derivatives contracts are contracts that are not traded
on an exchange but, instead, are bilaterally negotiated between two counterparties. According to
a report by Deloitte, the major banks earn approximately $55 billion per year in revenues from
OTC derivatives (roughly 37% of overall bank revenues). Fifteen percent to 20% of these
revenues per year ($8 billion to $11 billion) come from CDS.2
32. A CDS is a contract between a buyer of credit protection for some “reference
entity” and a seller of credit protection. The “protection buyer” pays a regular fee to the
“protection seller,” and the protection seller makes a fixed payment to the protection buyer if the
reference entity experiences a defined “credit event” during the life of the contract. Defined
1 Louise Story, A Secretive Banking Elite Rules Trading in Derivatives, N.Y. TIMES, Dec. 11, 2010, http://www.nytimes.com/2010/12/12/business/12advantage.html?pagewanted=all &_r=0.
2 Deloitte LLP, CENTRAL CLEARING FOR OTC DERIVATIVES IMPACT ON OTC REVENUES –
WHAT CAN YOU EXPECT beyond COMPRESSION? (2011), http://www.deloitte.com/ assets/Dcom-UnitedStates/Local%20Assets/Documents/FSI/us_fsi_OTCRevenues_POV_updated_080311.pdf, at 3.
index may be a more cost-efficient way to hedge a broad portfolio than buying individual CDS
for each bond.
38. A protection buyer may enter into a CDS without owning the underlying
referenced security. For example, a supplier that is reliant on one major manufacturer as its
primary customer might seek to protect itself against the risk that the manufacturer will fall into
bankruptcy. The supplier could purchase a CDS to hedge against the risk that this major
customer might go out of business without owning any debt securities issued by the
manufacturer.
39. CDS also offer protection buyers and sellers the ability to express a view on the
credit-worthiness of, for example, a corporation. An investor with a positive view on the credit
quality of a corporation can sell protection and collect payments from a protection buyer. An
investor with a negative view of the corporation’s credit can buy protection and receive payment
if the company defaults on its bonds or experiences some other credit event.
40. After a buy side participant enters into a CDS transaction with a dealer, the dealer
usually enters into an off-setting CDS transaction for the same reference entity and notional
amount with another sell side participant. In this off-setting transaction, the dealer is the buyer
and another dealer is the seller. The offsetting process often repeats itself several times such that
an initial CDS contract can lead to multiple offsetting CDS contracts. According to a Federal
Reserve Bank of New York report, over 60% of all CDS transactions are interdealer.6 This
means that for each CDS transaction involving buy side market participants, there are, on
6 Kathryn Chen, et al., Federal Reserve Bank of New York, An Analysis of CDS Transactions: Implications for Public Reporting, Staff Report No. 517 (Sept. 2011), http://www.newyorkfed.org/research/staff_reports/sr517.pdf.
average, three off-setting interdealer transactions.7 The notional value of these interdealer
transactions is trillions of dollars, although after netting, the outstanding value of these
transactions is reduced dramatically, but still exceeds $1 trillion. Taken together, this means that
Defendants systematically engaged in innumerable interdealer transactions in which they
essentially passed CDS contracts between themselves multiple times. In doing so, Dealer
Defendants provided to one another real-time price data on CDS − data which was unavailable to
buy side market participants. See §V1, infra.
B. CDS Documentation
41. CDS contracts are highly standardized. For example, as of 2011, 92% of CDS
trades have a standard coupon and 97% have fixed quarterly payment dates.8 Documentation of
CDS contracts is standardized under “ISDA Master Agreements” and product-specific forms and
definitions for CDS.
42. ISDA is a financial trade association in the OTC derivatives market. Dealer
Defendants control ISDA through seats on its board of directors, which is chaired by Stephen
O’Connor, a managing director of Morgan Stanley. ISDA’s board also includes Gerhard
Seebacher of Bank of America, Harry Harrison of Barclays, Guillaume Amblard of BNP Paribas,
Brian Archer of Citibank, Eraj Shirvani of Credit Suisse, Richard Herman of Deutsche Bank, R.
Martin Chavez of Goldman Sachs, Elie El Hayek of HSBC, and Diane Genova of JPMorgan.
43. ISDA maintains the industry standard OTC derivative contracts. In 1992, ISDA
developed the ISDA Master Agreement, under which parties could enter into swaps and any
7 Or Shachar, Exposing The Exposed: Intermediation Capacity in the Credit Default Swap Market (Feb. 2012), http://www.princeton.edu/bcf/newsevents/seminar/ExposingTheExposed. pdf, at 2.
8 Kathryn Chen, et al., How Might Increased Transparency Affect the CDS Market?, LIBERTY STREET ECONOMICS, Nov. 23, 2011, http://libertystreeteconomics.newyorkfed. org/2011/11/how-might-increased-transparency-affect-the-cds-market.html.
transactions, and options of various types. ISDA Master Agreements are used in more than 90%
of bilateral derivatives transactions globally. The ISDA Master Agreement constitutes a
framework of standardized terms. The first part of the agreement is a pre-printed form;
amendments and elections are set out in the Schedule to the Master Agreement. Confirmations
set out the particular terms of individual transactions entered into under the Master Agreement.
In 2002, the ISDA Master Agreement was revised to specifically address CDS contracts. This
document was entitled “Master Confirmation Agreement on Credit Default Swaps.”
C. Settlement of CDS Contracts
44. A specified credit event must occur before settlement obligations arise under a
CDS. Under standard ISDA documentation for CDS, the credit events that can trigger the
protection seller’s payment obligation on a CDS include an issuer’s bankruptcy, the acceleration
of payments on its obligations, default on its obligations, the failure to pay its obligations, the
restructuring of the issuer’s debt, or a repudiation or moratorium on payments on its obligations.
45. The determination of whether a credit event occurs involves consideration of the
performance of the reference entity under the CDS. In 2009, ISDA developed a new Master
Confirmation Agreement (the so-called “Big Bang Protocol”) that established “Determinations
9 Allen & Overy, An Introduction to the Documentation of OTC Derivatives, ISDA (May 2002), http://www.isda.org/educat/pdf/documentation_of_derivatives.pdf.
CDS contracts without owning the underlying reference entity. This act also greatly increased
trading in CDS.
50. There is no substitute for the protection afforded by CDS. The rapid rise in CDS
volume following their inception in 1997 demonstrates that investors turned to CDS to secure the
unique and critical function of credit protection. The outstanding notional value of CDS
increased from $100 billion in 1998 to $1 trillion in 2000, to $60 trillion in 2007, before dipping
to approximately $30 trillion following the recession of 2008.12
51. Dealer Defendants are the largest CDS dealers in the world. During the relevant
period, Bank of America, Barclays, BNP Paribas, Citibank, Credit Suisse, Deutsche Bank,
Goldman Sachs, JPMorgan, HSBC, Morgan Stanley, Royal Bank of Scotland, and UBS
accounted for well in excess of 95% of U.S. CDS dealing by notional amount.13
52. ISDA and Markit are integral to the functioning of the CDS market and Dealer
Defendants’ scheme to control and manipulate pricing in the CDS market. ISDA and Markit
provide the licensing, standards, codes, and transaction information necessary for CDS
transactions to take place and consummate, and each is effectively controlled by Dealer
Defendants. Moreover, they have assisted Dealer Defendants in their anticompetitive acts by,
inter alia, helping prevent transparency in the CDS market and the establishment of exchange
trading.
53. Dealer Defendants have been able to exclude new entrants on the sell side and as
a result, they face no other significant competitors in the CDS market. For example, Bank of 12 IntercontinentalExchange, Global Credit Derivatives Markets Overview: Evolution, Standardization and Clearing (Mar. 2010), https://www.theice.com/publicdocs/ice_trust/ ICE_CDS_White_Paper.pdf, at 3.
13 Office of the Comptroller of the Currency, U.S. Dept. of the Treasury, QUARTERLY
REPORT ON BANK DERIVATIVES ACTIVITIES, http://www.occ.treas.gov/topics/capital-markets/financial-markets/trading/derivatives/derivatives-quarterly-report.html.
banks, giving it access to a data set spanning credit, equities, and the broader OTC derivative
universe. At Dealer Defendants’ direction, Markit does not provide the actual CDS trade data it
collects to buy side market participants, which serves the economic interests of Dealer
Defendants. There is no legitimate reason why Markit would not make this data available, for
instance, on a paid subscription basis.
62. Dealer Defendants, on the other hand, had direct access to actual CDS transaction
data from interdealer trades. This data was not made available to buy side participants. As
described at §V.A., supra, after a buy side participant enters into a CDS transaction with a
dealer, the dealer usually enters into an off-setting CDS transaction for the same reference entity
and notional amount. In this off-setting transaction, the dealer is the buyer and another dealer is
the seller. The off-setting process often repeats itself several times such that for each CDS
transaction involving buy side market participants, there are, on average, three off-setting
interdealer transactions.25 Outside of the interdealer market, Dealer Defendants have direct
access to actual trade information through the provision of clearing services, as described, infra,
at §§VII and VIII. To handle margining requirements of clearing CDS, Dealer Defendants must
obtain actual transaction data.
63. Separately, Markit operates a service where it collects dealer end of day “marks”
(prices) on the books of the dealer and then aggregates and “cleanses” this data for retail to
customers either the day after collection or during the day of collection depending on the
subscription. Dealer marks are the prices ascribed by traders, at their discretion, to positions on
the books of the dealer. This data does not provide a real-time picture of market prices since it is
25 Or Shachar, Exposing The Exposed: Intermediation Capacity in the Credit Default Swap Market (Feb. 2012), http://www.princeton.edu/bcf/newsevents/seminar/ExposingTheExposed. pdf, at 2.
79. Throughout 2008, Citadel and CME had a series of meetings and communications
with key players in the CDS market whose cooperation they needed in order for CMDX to
succeed. Dealer Defendant participation in CMDX was critical because they controlled the CDS
market as well as Markit and ISDA.
80. Markit was engaged in licensing negotiations with CMDX in October 2008.28 It
was in Markit’s economic interest to participate in launching CMDX because Markit stood to
gain revenues from licenses. For example, CMDX planned to launch with all major CDX and
iTraxx indices, which Markit owned, as well as their single-name constituents, covering more
than 90% of the CDS market. The ability to offer exchange trading of the CDX and iTraxx
indexes was important because index CDS constituted approximately 50% of the market. In
addition, a functioning exchange would have necessarily created transaction data. Markit was
the recipient of dealer mark data in the OTC/RFQ bilateral regime. If an exchange had been set
up, Markit was in a position to potentially sell the exchange’s transaction data. Accordingly, it
was in Markit’s unilateral self-interest to participate in the creation of the exchange.
81. Markit’s business decisions are made by Markit’s board, which, in turn, is
controlled by Dealer Defendants, including: Bank of America, Barclays, BNP Paribas, Citibank,
Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan, Morgan Stanley, Royal Bank
of Scotland, and UBS.
82. Use of certain of ISDA’s Master Agreement terms that had become industry
standard and access to ISDA credit auction protocols was also crucial to operating CMDX. The
leadership of ISDA is dominated by the Dealer Defendants who control ISDA through seats on
28 CME Group News Release, CME Group and Citadel to Launch the First Integrated Credit Default Swaps Trading Platform and Central Counterparty Facility, Linked to CME Clearing (Oct. 7, 2008).
93. ICE’s clearing members, Dealer Defendants, are afforded preferential fee
treatment and also enjoy a revenue-sharing arrangement with ICE, which provides them with an
incentive to patronize ICE and a sustainable competitive advantage versus any other dealer that
seeks to be active in the CDS market but does not receive such preferential treatment. Annual
revenues on clearing services offered by the banks are estimated to be several billion dollars.32
94. Dealer Defendants control ICE’s membership and rules through seats on ICE’s
Risk Committee, which writes or approves ICE’s clearing rules. The members of ICE’s Risk
Committee are not publicly disclosed, but were reported to include senior personnel of
Defendants, including Ali Balali of Bank of America, Paul Mitrokostas of Barclays, Biswarup
Chatterjee of Citigroup, Andy Hubbard of Credit Suisse, Athanassios Diplas of Deutsche Bank,
Oliver Frankel of Goldman Sachs, Thomas J. Benison of JP Morgan, James Hill of Morgan
Stanley, and Paul Hamill of UBS.33
95. To join a clearinghouse, clearing members must meet the clearinghouse’s
requirements (capitalization, credit quality, and operational readiness) and must be prepared to
post a minimum deposit into the guarantee fund. For each transaction that is cleared, participants
must post initial margin for the transaction in an amount determined by the clearinghouse and
will also post or receive daily variation margin as determined by the clearinghouse based on
daily price changes. Initial margin represents a reserve that is intended to cover changes in price
on the position during the period from the default of a clearing member to the point at which the
position is liquidated. Variation margin settle changes in value of a position or portfolio through 32 Katy Burne, CFTC OK’s $50 mln minimum rule for swap clearing, Oct. 18, 2011, http://www.marketwatch.com/story/cftc-oks-50-mln-minimum-rule-for-swap-clearing-2011-10-18.
33 Louise Story, A Secretive Banking Elite Rules Trading in Derivatives, N.Y. TIMES, Dec. 11, 2010, http://www.nytimes.com/2010/12/12/business/12advantage.html?pagewanted=all &_r=0.
organized as broker-dealers or future commission merchants hold 5% of customer funds as
excess net capital. The 5% margin requirement effectively prevented smaller entities from
entering the CDS clearing business.35
99. As part of the CFTC’s rulemaking process, the U.S. Department of Justice
(“DOJ”) raised concerns that a clearinghouse’s “captured committees could serve as a
mechanism for attempts to further restrict competition among dealers and other market
participants.”36 Specifically, major dealers controlling a clearinghouse’s operations “could result
in their restricting access to new clearing members in an effort to insulate themselves from
competition in making markets . . . .”37 The DOJ further advised the CFTC that “[t]hese actions
against potential new clearing members could be explained away, for example, by expressing
risk management-related concerns.”38
100. In October 2011, the CFTC finalized a rule lowering the capital membership
requirement for firms to become clearing members to $50 million. The purpose of the CFTC’s
action was to reduce risk to the financial system resulting from concentration of CDS among the
35 Matthew Leising, ICE Clear Credit’s Member Rules Too Exclusive, Small Firms Say, Bloomberg, Aug. 9, 2011, http://www.bloomberg.com/news/2011-08-09/ice-clear-credit-s-member-rules-too-exclusive-small-firms-say.html.
36 U.S. Dept. of Justice, Comments on Proposed Rules Limiting Ownership and Regulating Governance for Derivatives Clearing Organizations, Designated Contract Markets, and Swap Execution Facilities, Before the U.S. Commodity Futures Trading Comm’n, Washington, D.C., at 9, In re RIN 3038-AD01 (Dec. 28, 2010), http://www.justice.gov/atr/public/comments/26561 8.pdf.
103. The price quotes for equity options long ago traded on a RFQ system, much like
the current CDS system. Starting in 1973, the Chicago Board Options Exchange (“CBOE”)
opened an exchange and clearinghouse for equity options which resulted in straight-through
processing, and by 1977, exchange-trading of options was universal. The spreads on these
derivative products experienced a significant compression as a result. In addition, this reduced
pricing provided a significant increase in the volume of equity options traded. For example, on
CBOE’s first day in April, 1973, 900 options contracts traded. By the end of the year, one
million options contracts had traded on the exchange. Within 10 years, 500,000 contracts were
trading per day.40
104. The pricing of NASDAQ shares was fixed by many of the same Defendants that
fix prices and exclude competitors in the CDS market. This price-fixing led to enforcement by
the DOJ and private suits, which introduced competition into the market leading to the advent of
exchange trading. Prior to an industry report shedding light on possible price fixing, NASDAQ
market makers had enforced a minimum spread of ($0.25) on a RFQ system by not posting odd-
eighth quotes for a majority of large NASDAQ stocks.41 This led to higher trading costs.
Litigation pursued by the DOJ and private litigants resulted in the quoting of NASDAQ shares at
odd-eighths ($0.125 increments) and provided an opportunity for more players to enter the
market.42 In addition to the changes resulting from litigation, the Securities and Exchange
40 Jerry W. Markham, A FINANCIAL HISTORY OF THE UNITED STATES, Vol. III, from the Age of Derivatives into the New Millennium (1970-2001) (2002).
41 See William G. Christie, Paul H. Schultz, Why do NASDAQ Market Makers Avoid Odd-Eighth Quotes? THE JOURNAL OF FINANCE, Vol. 49, No. 5, December 1994, at 1813-1840.
42 Michael Barclay; William Christie; Jeffrey Harris; Eugene Kandel; Paul Schultz, Effects of Market Reform on the Trading Costs and Depths of Nasdaq Stocks The Journal of Finance, Vol. 54, No. 1 (Feb. 1999), at 1-34 (most widely accepted analysis of the situation by the industry).
Commission (“SEC”) imposed new trading rules for NASDAQ leading to a decline in quoted
and effective spreads of approximately 30%.43 As more entities were allowed to enter into the
pricing of NASDAQ shares, the price declined to mere pennies on the dollar, resulting in a
reduction in spreads to around 5% of the previous cost of trading.44 Correspondingly, this
reduced pricing provided a significant increase in the volume of shares traded on NASDAQ
shares.
105. CDS pricing would have followed the same trajectory of compressed spreads and
increased volume had CMDX opened as planned in November 2008. Plaintiff and the class
would have experienced a significantly reduced price for execution and clearing on its CDS
purchases in line with the decreases in prices for NASDAQ shares and equity options when
competition and exchange-trading were brought into the marketplace. Such a transaction price
decline, spread compression, and resulting increase in volume would have been expected to
occur had exchanges been successful. Plaintiff and other buy side participants would have
experienced significantly reduced prices for execution and clearing on single-name CDS and
index-CDS purchases. Plaintiff estimates that the OTC/RFQ bilateral trading regime maintained
by Defendants inflated CDS prices by approximately 17 to 34 times the cost of trading on an
exchange such as CMDX. These inflated spreads result in an overcharge to buy side CDS
market participants of more than $7 billion per year.
43 Id.
44 Louise Story, A Secretive Banking Elite Rules Trading in Derivatives, NY TIMES, Dec. 11, 2010, available at http://www.nytimes.com/2010/12/12/business/12advantage.html? pagewanted=all&_r=0.
The EC examined whether Markit colluded with its 16 bank owners in order to control the
financial information on CDS. The EC has indicated that these 16 banks, which act as dealers in
the CDS market, give most of the pricing, indices, and other essential daily data exclusively to
Markit.50 These actions could be the consequence of collusion between them or an abuse of a
possible collective dominance and may have the effect of foreclosing the access to the valuable
raw data by other information service providers.51
109. On March 26, 2013, the EC announced that it was extending its CDS
investigation to include ISDA. The EC is examining whether the 16 investment banks that are
the targets of the investigation used ISDA to coordinate efforts to delay or prevent exchanges
from entering the credit derivatives business.52
110. CDS transactions are part of a market that has historically been largely
unregulated by the securities and futures trading laws. The Commodities Futures Modernization
Act of 2000 (“CFMA”) explicitly limited the regulation of OTC derivative transactions by
sophisticated parties, such as “futures” under the Commodity Exchange Act of 1936 (CEA) or
“securities” under the federal securities laws. For example, OTC market participants generally
structured their activities in CDS to comply with the CFMA’s “swap exclusion” from the
Securities Act of 1933 and the Securities Exchange Act of 1934. Neither the SEC nor the CFTC
sits as an antitrust enforcement body with respect to agreements by market participants to fix,
maintain, or inflate prices; conspire to monopolize the market; or boycott market entrants. The
50 Press Release, European Union Commission, Antitrust: Commission probes Credit Default Swaps market, Apr. 29, 2011, http://europa.eu/rapid/press-release_IP-11-509_en.htm.
51 Id.
52 Press Release, European Union Commission, Antitrust: Commission extends CDS information market investigation to International Swaps and Derivatives Association (ISDA), March 26, 2013, http://europa.eu/rapid/press-release_IP-13-286_en.htm.
SEC and CFTC do not, and cannot, regulate the functioning of the CDS market as it relates to
dealer control of entities such as Markit and ISDA.
X. CLASS ACTION ALLEGATIONS
111. Plaintiff brings this action as a class action under Rule 23(a) and 23(b)(3) of the
Federal Rules of Civil Procedure, on behalf of itself and all others similarly situated. The
“Class” is defined as:
All “buy side” persons or entities which bought or sold CDS contracts directly from “sell side” Dealer Defendants (or their subsidiaries and/or affiliates), between January 1, 2008 and December 31, 2011. Excluded from the Class are defendants and their employees, affiliates, parents, subsidiaries, and co-conspirators, whether or not named in this Complaint, the United States government, and the Court and any members of the Court’s immediate family.
112. The Class is so numerous that joinder of all members is impracticable. While the
exact number of Class members is unknown to Plaintiff at this time, Plaintiff is informed and
believes that at least tens of thousands of geographically dispersed Class members purchased
CDS during the relevant period consistent with the class definition.
113. Plaintiff’s claims are typical of the claims of the other members of the Class.
Plaintiff and the members of the Class sustained damages arising out of Defendants’ common
course of conduct in violation of the antitrust laws as alleged herein.
114. The injuries and damages of each member of the Class were directly caused by
Defendants’ wrongful conduct in violation of the antitrust laws as alleged herein. Plaintiff will
fairly and adequately protect the interests of the members of the Class and has retained counsel
competent and experienced in class action litigation, including antitrust class action litigation.
115. Common questions of law and fact exist as to all members of the Class and
predominate over any questions affecting solely individual members of the Class. Among the
questions of law and fact common to the Class are:
(a) whether Defendants conspired to manipulate the CDS market, including the fixing and maintenance of supracompetitive CDS spreads, in violation of the Sherman Act;
(b) whether Defendants conspired to maintain and perpetuate the OTC/RFQ bilateral trading regime by which they controlled the CDS market;
(c) whether Defendants conspired to obtain and maintain their sell side monopoly in the CDS market;
(d) whether Defendants agreed to boycott market entrants such as CMDX and CME from the CDS market and prevent the introduction of exchange trading in CDS; and
(e) the appropriate measure of damages for the injury sustained by Plaintiff and other members of the Class as a result of Defendants’ unlawful activities.
116. A class action is superior to other available methods for the fair and efficient
adjudication of this controversy because joinder of all Class members is impracticable. The
prosecution of separate actions by individual members of the Class would impose heavy burdens
upon the courts and Defendants, and would create a risk of inconsistent or varying adjudications
of the questions of law and fact common to the Class. A class action, on the other hand, would
achieve substantial economies of time, effort, and expense, and would assure uniformity of
decision as to persons similarly situated, without sacrificing procedural fairness or bringing about
other undesirable results.
117. The interest of members of the Class in individually controlling the prosecution of
separate actions is theoretical rather than practical. The Class has a high degree of cohesion and
prosecution of the action through representatives would be unobjectionable. The amounts at
stake for Class members, while substantial in the aggregate, are often not great enough
C. That the Court award damages sustained by Plaintiff in an amount to be proved at
trial, to be trebled according to law, plus interest, including prejudgment interest, attorneys’ fees and
costs of suit; and
D. That the Court directs such further relief it may deem just and proper.
DEMAND FOR JURY TRIAL
Pursuant to Rule 38(a) of the Federal Rules of Civil Procedure, Plaintiff demands a jury
trial as to all issues triable by a jury.
DATED: May 3, 2013 FREED KANNER LONDON & MILLEN LLC
/s/ Michael J. Freed
MICHAEL J. FREED STEVEN A. KANNER DONALD L. SAWYER 2201 N. Waukegan Rd., Suite 130 Bannockburn, IL 60015 Telephone: 224-632-4500 224-632-4521 (fax) SCOTT+SCOTT, ATTORNEYS AT LAW, LLP CHRISTOPHER M. BURKE KRISTEN M. ANDERSON 707 Broadway, Suite 1000 San Diego, CA 92101 Telephone: 619-233-4565 619-233-0508 (fax) SCOTT+SCOTT, ATTORNEYS AT LAW, LLP DAVID R. SCOTT 156 South Main Street P.O. Box 192 Colchester, CT 06415 Telephone: 860-537-5537 860-537-4432 (fax)
SCOTT+SCOTT, ATTORNEYS AT LAW, LLP DONALD A. BROGGI MAX SCHWARTZ The Chrysler Building 405 Lexington Avenue, 40th Floor New York, NY 10174-4099 Telephone: 212-223-6444 212-223-6334 (fax) ROBINS, KAPLAN, MILLER & CIRESI L.L.P. THOMAS J. UNDLIN K. CRAIG WILDFANG STACEY P. SLAUGHTER 2800 LaSalle Plaza 800 LaSalle Avenue South Minneapolis, MN 55402 Telephone: 612-349-8500 612-339-4181 (fax) THE MOGIN LAW FIRM, P.C. DANIEL J. MOGIN 707 Broadway, Suite 1000 San Diego, CA 92101 Telephone: 619-687-6611 619-687-6610 (fax) LINDH FOSTER, LLC ERIC L. FOSTER 29 Soundview Road, Suite 11B Guilford, CT 06437 Telephone: 203-533-4321 203-538-1007 (fax)