The Fire & Police Pension Association of Colorado is suing nine banks, including six from Canada, accusing them of rigging the Canadian Dealer Offered Rate (CDOR) to improve their profits.
The proposed class action lawsuit was filed in US District Court in Manhattan against Royal Bank of Canada, Deutsche Bank, HSBC, National Bank of Canada, Bank of America, Toronto-Dominion Bank, Bank of Nova Scotia, Bank of Montreal, and Canadian Imperial Bank of Commerce.
The pension has accused the banks of suppressing the CDOR from Aug. 9, 2007, to June 30, 2014. It says the banks colluded to keep CDOR rates low by intentionally quoting lower rates because they were emphasizing derivatives businesses that required them to pay rates based on CDOR, according to The Wall Street Journal. The suit claims the lower rate saved the banks money and increased profits on interest-rate swaps, as well as other CDOR-based obligations.
The pension fund is seeking unspecified damages for investors for alleged violations of US antitrust, commodity and anti-racketeering laws. CDOR is the rate at which banks are willing to lend to companies in Canada. It is calculated daily by Thomson Reuters based on rate submissions from banks.
According to the complaint, the Colorado fund conducted more than $1.2 billion of CDOR-based derivatives transactions during the alleged violations. The fund accused the banks of coordinating false CDOR submissions because their CDOR-based derivatives portfolios had become much larger than their CDOR-based loan portfolios. The CDOR-based derivatives portfolios are what the banks make interest payments on, and they collect interest from the CDOR-based loan portfolios.
The pension also claims the alleged violations included 151 consecutive days when four of the banks made identical submissions.
The case is Fire & Police Pension Association of Colorado v Bank of Montreal et al, US District Court, Southern District of New York, No. 18-00342.
Tags: Big Banks, Canadian Banks, Fire & Police Pension Association of Colorado, Litigation, Pension