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.
