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A Manhattan federal judge ruled on Wednesday to allow a case filed by U.S. pension funds accusing a group of banks of conspiring to rig the prices of Mexican government bonds to move forward, citing chatroom transcripts between traders as evidence of collusion.

U.S. District Judge J. Paul Oetken denied the banks' request to dismiss the case, finding that the pension funds had presented enough direct evidence to allege an antitrust conspiracy under the Sherman Act. The judge emphasized that despite the use of market slang by the traders, the transcripts clearly showed agreements to manipulate the bond prices.

In one instance, a 2010 chat between a Barclays Mexico trader and a Deutsche Bank Mexico trader revealed a conversation in which the Barclays trader instructed the Deutsche Bank trader to "raise it," referring to a type of Mexican government bond (MGB) maturing in 2038. The Deutsche Bank trader responded affirmatively, according to the order. Another 2012 exchange between a JPMorgan Mexico trader and a Citibanamex trader further demonstrated collusion, with the JPMorgan trader warning that lowering prices would harm them, to which the Citibanamex trader agreed to avoid doing so.

The banks had argued in a motion to dismiss that the pension funds had failed to show they suffered any harm from the alleged bond price-rigging. However, Judge Oetken disagreed, stating that the pension funds provided sufficient evidence of injury caused by the price-fixing. The pension funds presented statistical data showing an increase in the median bid-ask spread for certain government bonds during the relevant period compared to five years afterward, indicating that they paid higher prices for the bonds and received less when reselling them than they would have in a competitive market.

Judge Oetken also upheld a claim of unjust enrichment against the banks, rejecting the banks' argument that existing contracts with the pension funds would bar the claim. The judge noted that while investment contracts existed between the parties, they did not clearly cover whether the banks were permitted to engage in a price-fixing scheme for MGBs in the secondary market.

The case had previously been dismissed due to jurisdictional concerns, as the alleged collusion took place in Mexico. However, the Second Circuit revived the case last year, ruling that the pension funds had plausibly argued that the brokers involved in the bond sales were "mere pass-throughs" for the banks, and that this was sufficient to establish jurisdiction.

Representatives from Bank of America, one of the banks involved in the case, declined to comment, and counsel for other parties did not immediately respond to requests for comment.

The pension funds are represented by Lowey Dannenberg PC, Berman Tabacco, Hausfeld LLP, Radice Law Firm PC, Bleichmar Fonti & Auld LLP, and Barrack Rodos & Bacine. The banks are represented by Skadden Arps Slate Meagher & Flom LLP, Allen & Overy, Shearman & Sterling, WilmerHale, Davis Polk & Wardwell LLP, Cleary Gottlieb Steen & Hamilton LLP, and Simpson Thacher & Bartlett LLP.

The case is In Re: Mexican Government Bonds Antitrust Litigation, case number 1:18-cv-02830, in the U.S. District Court for the Southern District of New York.