Three U.S. pension funds sued six of the world’s largest banks on Thursday, including Goldman Sachs Group Inc and JP Morgan Chase & Co, accusing them of conspiring to stifle competition in the more than $1 trillion stock lending market.
In the lawsuit filed in a Manhattan federal court, the funds accused the banks of boycotting start-up lending platforms by threatening and intimidating their potential clients. The defendants include Bank of America Corp, Credit Suisse AG CSAG.UL, Morgan Stanley, UBS AG, Goldman and JP Morgan.
The Iowa Public Employees’ Retirement System, Orange County Employees’ Retirement System and Sonoma County Employees’ Retirement Association said in the lawsuit that the banks have cornered the market on stock lending in violation of federal antitrust law.
“Through various improper means, the likes of Goldman Sachs and Morgan Stanley have for years colluded to maintain their power over this little-known-but-lucrative corner of Wall Street,” said Michael Eisenkraft, a lawyer for the funds and partner with Cohen Milstein.
Representatives of Bank of America, Goldman Sachs and JPMorgan declined to comment. The other banks did not immediately respond to requests for comment.
The pension funds said collusion by the banks harms investors and retirees by forcing them to pay high fees to engage in stock lending.
Stock lending is related to short selling and involves lending a stock to an investor or firm through a broker or dealer. Pension funds and other institutional investors frequently lend stock to hedge funds.
In short selling, a security that is not owned or has been borrowed is sold with the idea that it can be bought at a future date at a lower price.
The funds claimed in the lawsuit that the defendants conspired to take down upstart stock lending platforms AQS, which was developed by Quadriserv Inc, and SL-x, which would have allowed lenders and borrowers to interact directly.
The lawsuit claimed that in 2012 Goldman Sachs threatened to stop doing business with Bank of New York (BNY) Mellon if it continued to support the AQS platform and that the bank agreed to stop using it. BNY Mellon declined to comment.
The lawsuit said that through a joint project called EquiLend LLC, the banks purchased SL-x’s intellectual property and shelved it, according to the lawsuit. The funds accused the banks of establishing EquiLend in 2001 to safeguard their interests in the stock lending market.
A spokesman for EquiLend, which is also named as a defendant in the lawsuit, declined to comment.
Nigeria’s Modular Refinery Projects Faces Threat
…48 Projects Lie Fallow
The federal government is seriously worried and confused about what to do to facilitate development of modular refinery projects through which it hopes to achieve self sufficiency in petroleum products refining.
Government through the minister of state for petroleum resources Ibe Kachikwu has set 2019 as deadline for importation of petroleum products and is currently pursuing ambitious rehabilitation of the 445,000 barrels capacity local refineries while encouraging private sector support to meet the target.
Speaking at the annual conference of the National Association of Energy Correspondents, with theme, “PIGB: Prospects And Challenges To Nigerian Oil And Gas Industry” Kachikwu said the Department of Petroleum Resources, DPR, has issued between 40 to 50 licenses to potential investors To had indicated interest to build modular refinery but only 2 are currently being executed.
The trend according to the minister is worrisome given the priority and determination of government to exit products Import and fully develop the industry value chain.
Similarly in the sector alao urged the Federal Government to engage banks in financing the building of modular refineries in the country. They made the plea at a panel session of the conference.
In his remarks, Retired Capt. Emmanuel Iheanacho, the Chairman, Integrated Oil and Gas Ltd., said that in the last 10 years, the demand for refined products had always been on the increase.
Iheanacho said that building a modular refinery of about 1,000 barrel cost over 1.2 billion dollars.
“Building a modular refinery is not easy, apart from citing your refinery beside the sea, one can as well cite it near a marginal oil field. Finance is the major reasons why most investors in the modular refineries abandoned it.
“No bank is ready to give loan to any investors in modular refineries that is why it is just only two out of 40 investors giving licences that were able to build it.
“Government should engage the banks to provide the finance needed for building modular refineries,” he said.
In his comments, Mr Muda Yusuf, the Director-General, Lagos Chamber of Commerce and Industry, urged the Federal Government to review its policy on refined products to encourage investors into the sector.
Yusuf said, “It is pitiful that after many years of oil discovery, the country is still importing its refined products for consumption.
“As long as we have oil and gas sector link with the government, private investors will continue to evade the sector.”
The chamber director-general also urged the government to overhaul the sector to encourage private investors.
Also, Mr Olumide Adeleke, the Deputy Director, Head, Engineering and Standards Division, Department of Petroleum Resources (DPR), said it was obvious that finance was the problem of building modular refineries.
Adeleke, however, said that the department would revoke the licence of any investors who could not build the refinery within the stipulated period.
Commenting, Dr Saka Matemilola, the Chairman, Nigerian Council of Society of Petroleum Engineers, urged NNPC to repair the existing refineries to improve its production.
Matemilola also urged DPR not to revoke the licences of investors who were unable to build modular refineries. According to him, withdrawing the licences will not solve the problems facing the sector.
He said that there was need to work with the licence owners to address the issue of sourcing for finance from the banks to build the refineries.