Pension Funds Could Be In Line For Settlement Stemming From Credit Derivative Trading Lawsuit


Many investors, pension funds included, find out on Monday how big their share might be of a $1.9 billion settlement stemming from the way credit-default swaps were traded by banks.

The lawsuit claimed that Wall Street banks conspired to overcharge investors for the swaps. The class period is January 2008 to September 2015.

More from the Wall Street Journal:

Several hedge funds and other big credit investors are in line for payouts of tens of millions of dollars or more, thanks to a lawsuit challenging how credit derivatives were traded in the years after the financial crisis.


Some potential beneficiaries “I think have no idea that it’s coming,” said a fund executive familiar with the case.

Hedge funds, asset managers, pension funds and other investors involved in the suit are expected to get an early glimpse of where they stand on Monday, according to people familiar with the case. They are to receive access to a website showing the proposed methodology for divvying up the settlement. That information will help funds to get a closer idea of their payouts, some of the people said, adding that the methodology hasn’t been finalized and is complex.

Individual payouts from the suit—the aggregate amount is one of the largest in a private antitrust case of its kind—will be a welcome boost for funds still reeling from rocky markets in 2015. Many fund firms have been burned by investments in distressed corporate bonds and wagers on energy.


The suit alleged that the banks overcharged clients and, together with two other institutions, delayed credit derivatives from being openly traded on exchanges, where prices would be more transparent. In settling, the defendants didn’t admit or deny fault. The process that moves forward Monday will allocate payouts from that suit.

The precise payouts won’t be known for weeks.


Photo by  Dirk Knight via Flickr CC License

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