AAI Working Paper No. 14-04: Big Bad Banks: Bid Rigging and Multilateral Market Manipulation
In this paper, AAI Senior Fellow John Connor assembles information from around the world of investigations and the resulting penalties imposed on price-fixing banking cartels (and similar violations) on the world’s largest corporate banks and their employees. He finds that there have been more than 400 instances of large banks involved in at least 63 separate illegal conspiracies to manipulate markets. These markets are huge in terms of affected revenues or assets and most are global in scope. A preliminary and partial estimate of affected commerce is $1,432 trillion.
As of January 2014, the total amount of monetary penalties imposed is more than $26 billion. Many investigations are incomplete, so he expect fines to climb to $40 billion within the next three years. At least 46 bank employees have been indicted for price fixing and bid rigging. Moreover, several banks have also had serious legal non-monetary restrictions imposed, potentially the most important being Deferred Prosecution Agreements (DFAs) by U.S. authorities. With one minor exception, U.S. and UK antitrust authorities have declined to bring criminal charges against the banks.
Connor states antitrust injuries are likely to rise to trillions of dollars, but compensation to victims will be difficult. Private damages suits are at very early stages and face many obstacles.