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Press Release
Quinn Emanuel Urquhart & Sullivan LLP
Fideres Capital Management Ltd
Investment banks to face multi-billion pound CDS claims in UK
5th October 2015
After securing nearly US$ 1.9bn in damages as lead counsel in the US class action against
the major investment banks last week, law firm Quinn Emanuel together with litigation
funder Fideres Capital will pursue competition damages claims in Europe relating to the
trading and clearing of credit default swaps (CDS).
The London office of the international law firm Quinn Emanuel Urquhart & Sullivan (Quinn
Emanuel) and specialist litigation funder Fideres Capital Management (Fideres Capital) are
working with a host of European institutional investors, banks and other users of credit
default swaps (CDS) to pursue claims in the English courts to recover damages arising from
the infringement of EU competition law by major investment banks.
It is alleged that major CDS dealer banks colluded over a period of years starting from
2007/8 to prevent the establishment of an exchange and independent central clearing
platform for the trading and settlement of CDS, thereby preventing competition, reducing
price transparency and inflating transaction costs for users of CDS, while protecting excess
profit margins for dealers.
Quinn Emanuel, who successfully led similar claims against the CDS dealer banks in the US
and secured one of the largest ever settlements of nearly US$1.9bn, is working with Fideres
Capital to bring the claims in the English courts. Quinn Emanuel and Fideres Capital are
looking to achieve similar stellar results for their clients in Europe. Quinn Emanuel brings a
deep understanding of the CDS manipulation and its impact on investors and users of CDS,
whilst the litigation funding provided by Fideres Capital will allow their clients to pursue
claims without any financial cost or risk.
The anti-competitive conduct of the major investment banks relating to CDS has been the
subject of long running investigation by both the US Department of Justice (DoJ) and the
European Commission (EC). Whilst the DoJ's investigation has not progressed and remains
open, and a decision from the European Commission is not expected until next year, Quinn
Emanuel developed and brought a compelling class claim in the US alleging that the banks
had infringed US antitrust laws. In the face of this claim, the banks decided to settle,
agreeing to pay nearly US$1.9bn in order to mitigate their US exposure, rather than face the
prospect of further legal proceedings.
Following on from the US claim and settlements, and in anticipation of an infringement
decision from the European Commission,1 a number of European institutional investors and
financial institutions are working with Quinn Emanuel and Fideres Capital to assess and
develop potential claims in the English High Court.
The US settlement is positive news for European users of CDS and buy-side firms. Boris
Bronfentrinker, head of the UK competition litigation practice at Quinn Emanuel, said:
“The result we have achieved in the US is a big success for capital market participants, and of
significant importance for Europe. The anti-competitive conduct of the major investment
banks in respect of CDS was global in nature and therefore capital market participants should
be able to achieve similar results in an English claim. We are perfectly positioned to build on
the fantastic work that was done in the US to extract compensation for institutional investors
and financial institutions who have suffered losses through the anti-competitive conduct of
the major banks in Europe.”
European institutional investors and financial institutions that have transacted in CDS should
seek comprehensive legal advice to ensure they protect their position and best position
themselves to get full compensation. Quinn Emanuel and Fideres Capital are ready to assist
Steffen Hennig, partner at Fideres Capital said: "We will support and provide funding to
European institutions to pursue their claims without needing to incur the significant cost and
risk associated with these complex claims against the large banks. Our direct banking
experience and our focus on funding claims relating to financial markets, as well as our
involvement with the US class action, give us a unique edge in pursuing this action”
-EndsNotes for Editors:
Credit default swaps (CDS) are derivative transactions in which one party buys credit
protection from another party against the default or bankruptcy of a corporate or sovereign
borrower. CDS are bilaterally traded over-the-counter, that means that investors, buy-side
firms and non-dealers who wish to enter into a CDS position usually have no choice but to
enter into a transaction with one of the major CDS dealer bank.
Since 2006, third parties developed exchanges for the trading of CDS, both in the US (CMDX,
developed by CME and Citadel) and in Europe (Eurex, developed by Deutsche Börse), and
attempts were made in 2007/2008 to bring those exchanges to market and get them
operational. These exchanges would have reduced the credit risk inherent in OTC
transactions and would have substantially reduced the transaction costs paid by buy-side
market participants and investors.
The market for CDS is tightly controlled by a small number of large banks, the CDS dealer
banks2. Faced with potential competition from exchanges, CDS dealer banks colluded with
In July 2013, the EC announced its ”preliminary view that the banks acted collectively to shut out
exchanges from the market because they feared that exchange trading would have reduced their
revenues from acting as intermediaries in the OTC market”: European Commission, IP/13/630, 1 July
The ‘CDS dealer banks’ include BNP Paribas, Bank of America, Barclays, Citigroup, Credit Suisse,
Deutsche Bank, Goldman Sachs, HSBC, JPMorgan, Morgan Stanley, RBS, and UBS
each other, to foreclose those attempts and in order to preserve for themselves the market
in OTC CDS trading so that they could (continue to) make huge profits, at the expense of
investors and non-dealers. The CDS dealer banks exercised their control over the CDS market
by limiting access to real-time pricing information through their influence on data provider
Markit and by preventing competition for the trading of CDS from exchanges thereby being
able to overcharge their customers through inflated bid/ask spreads.
Quinn Emanuel Urquhart & Sullivan is the largest global disputes law firm, with over 700
lawyers in 19 offices in 10 countries dedicated solely to commercial litigation. Its dispute
resolution expertise covers virtually every type of business dispute including
antitrust/competition disputes, class action litigation, commercial litigation, financial
litigation, bankruptcy litigation and white collar crime and international arbitration.
The European competition litigation department is involved in a number of major
competition litigation matters in both London and Germany, where is it acting for some of
the world's largest companies. It is one of the only top tier law firms that regularly acts in
competition litigation for clients both as claimants and defendants, and is highly regarded
for its work on both sides of the “v”.
Fideres Capital Management is a London based specialist litigation funder focused on claims
relating to banking, securities and financial markets. Aside from its litigation funding
business the firm has a strong track record in assisting investors in dispute resolution cases
relating to capital markets and distressed investments and has been acting as advisor in
more than 30 cases, including several anti-trust class actions relating to market
For media interviews and further information please contact:
Boris Bronfentrinker, partner, Quinn Emanuel Urquhart & Sullivan:
Tel: +44 (0) 20 7653 2090
Mobile: +44 (0) 7738 807 838
[email protected]
Steffen Hennig, partner, Fideres Partners:
Tel: +44 (0) 20 3397 5163
Mobile: +49 (0) 176 6339 1228
[email protected]