Goldman Sachs, JPMorgan Chase, Citigroup, Deutsche Bank, Bank of America and 11 other banks are under investigation for collusion.  A probe, by the international financial community, led by the European Union, is focusing on credit-default swaps for companies and sovereign debt.  Specifically, they're trying to determine whether these 16 bank dealers colluded by giving market information to Markit, a financial information provider.  Regulators also will examine whether 9 of the firms struck unfair deals with ICE Clear Europe, a clearinghouse for derivatives, so as to shut out competitors.

“Lack of transparency in markets can lead to abusive behavior and facilitate violations of competition rules.  I hope our investigation will contribute to a better functioning of financial markets."  - - Joaquin Almunia, EU’s Competition Commissioner.

Global regulators believe that CDS trades helped fuel the financial crisis and, therefore, intend to toughen the regulations.  This investigation is separate and apart from investigations by the U.K. and U.S into whether possible manipulataion of the London interbank offered rate, or "LIBOR."

        16 Banks Facing Collusion.   Goldman Sachs, JPMorgan, Bank of America, Citigroup, Deutsche Bank, Barclays, BNP Paribas, Commerzbank, Credit Suisse Group, HSBC Holdings, Morgan Stanley, Royal Bank of Scotland, UBS, Wells Fargo, Credit Agricole and Societe Generale. They will be investigated for possible collusion in giving “most of the pricing, indices and other essential daily data only to Markit." 

The regulator said this "may have the effect of foreclosing the access to the valuable raw data by other information service providers.” It also referred to some clauses in Markit’s licence and distribution agreements that "could be abusive and impede the development of competition in the market for the provision of CDS information.”

       9 Banks Facing Collusion.   Bank of America, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan, Morgan Stanley and UBS.  The EU also will separately investigate CDS clearing agreements struck by ICE Clear Europe with the banks.

For further details, go to:   [Bloomberg, 4/29/11, "Goldman Sachs, JPMorgan Among Banks Probed .."]