In the aftermath of the LIBOR convictions in May this year, in which five global banks agreed to pay $5 billion for their manipulation of interbank interest rates, 22 banks were sued on Thursday for their suspected involvement in manipulating the interest rates on U.S. Treasury securities.

The alleged conspiracy to manipulate Treasury auctions was the first nationwide class action lawsuit of its kind and included banks such as Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan Chase, and 17 others. If history is any guide, jail sentences are unlikely in the event of a guilty plea or conviction, with fines and the firing of the “bad apples” at the guilty institutions being the norm.

The case is being brought by the State-Boston Retirement System (SBRS), which is the public employee pension fund for Boston. The $12.5 trillion Treasury market was manipulated, the case stated, through the use of chat rooms, instant messages, and other means in an effort to coordinate strategy and exchange confidential consumer information. The end result was that prices for Treasury securities were inflated for investors in the pre-auction market, with the banks then covering their positions in the “when issued” market at a deflated price.

Suspicion arose starting in December 2012 when wide gaps were noted between the auction and “when issued” prices, which then narrowed when the U.S. Department of Justice began investigating the manipulation of the LIBOR rate. The SBRS is not alone in their suspicion as media had previously reported that the Justice Department was investigating the issue as of last month.

Injured parties include private investors, city governments, and corporations who all paid too much for their securities as a result of the manipulation. One of the lawyers at the firm representing SBRS stated, ”Even a small manipulation in Treasury rates can have enormous consequences.”

No comment could be obtained from those banks that were contacted regarding the case, including Bank of America, Citigroup, and Deutsche Bank.

If guilty of the accusations, the question remains, will we see yet more fines for the bad behavior, or will jail sentences actually be issued? Following the convictions in the LIBOR case in May, CEO of J.P. Morgan Jamie Dimon stated, “The lesson here is that the conduct of a small group of employees, or of even a single employee, can reflect badly on all of us, and have significant ramifications for the entire firm.” In light of the fact that the bank recently pled guilty to the same behavior with LIBOR that it is now being charged with regarding Treasury securities, perhaps he was implying not to get caught.

Under the tenure of Dimon, who has made over $1 billion dollars during that span, the bank has paid approximately $35 billion in fines for criminal conduct.

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