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Nomura Wins Affirmance of Dismissal of SSA Bonds Antitrust Action

Representing Nomura Securities International, Inc. (NSI), Paul, Weiss won the affirmance by the Second Circuit of the dismissal of a sprawling antitrust action concerning U.S. dollar-denominated supranational, sovereign and agency bonds (SSA bonds).

In the putative class action, In Re: SSA Bonds Antitrust Litigation, investor plaintiffs alleged that Nomura and other major global financial institutions conspired to manipulate prices in the multitrillion-dollar global market for SSA bonds, violating Section 1 of the Sherman Act.

Citing various chats, the plaintiffs argued that they had plausibly alleged an antitrust claim based on the defendants’ “continuous and ongoing conspiracy to collude with each other in the secondary market for USD SSA bonds to Plaintiffs’ detriment.” The plaintiffs alleged that banks operating as dealers in the USD SSA bond market and certain former employees responsible for the banks’ USD SSA trading business conspired to achieve prices and terms more favorable to them and worse for their customers.

Reviewing the case de novo, the Second Circuit rejected the investors’ arguments, adopting Nomura and other defendants’ argument that the conspiracy was implausible. “Plaintiffs have cast a net so wide that the claimed antitrust conspiracy is implausible as alleged,” the court held. The panel reasoned that, while the “decentralized, opaque, and frenetic nature of the secondary market for SSA Bonds” may make it vulnerable to manipulation by individual traders colluding on specific trades, the alleged conspiracy involving a “super-desk” of more than 20 entities in different countries conspiring “every day, nearly all day” was simply not plausible. Having found that the plaintiffs failed to plead a plausible conspiracy, the Second Circuit did not reach the issues of personal jurisdiction, venue and jurisdictional discovery.

The Paul, Weiss team included litigation partner Aidan Synnott.

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