Pennsylvania's treasury department is accusing about a dozen large financial firms of working together to illegally inflate the price of bonds issued by Fannie Mae and Freddie Mac over seven years.
A federal court filing by Pennsylvania Treasurer Joe Torsella cites what his office says is evidence from a "cooperating co-conspirator" in a U.S. Department of Justice investigation into price-fixing in the secondary market for bonds issued by government-controlled companies.
Evidence cited in the filing late Thursday includes brief transcripts of what it says are electronic chats between traders from various financial institutions that are the largest dealers of the bonds.
In the discussions, the traders allegedly agree to fix bond prices at artificially inflated prices, cheating Pennsylvania and other buyers of the bonds. The price-fixing began in 2009 and lasted through 2015, and violates federal anti-trust law, Torsella's filing said.
In one 2012 exchange in Torsella's filing, a Morgan Stanley trader says, "I just don't want to create a race to the bottom between the 3 of us, doesn't help anyone."
That trader and traders from Deutsche Bank and BNP Paribas then agree on a price.
One trader proposes a price of $99.985, another agrees and the third responds, "Good by me."
An analysis shows that pricing patterns are consistent with such a price-fixing agreement, the filing said. The "economic fingerprints" of the conspiracy diminished after January 2016, when the cooperating co-conspirator discovered it, it said.
Torsella's office said it is bound by a confidentiality agreement and could not reveal how it came to receive information from the cooperating co-conspirator. It would not say who the confidentiality agreement is with.
Named as defendants are Barclays, Bank of America, Citigroup, Credit Suisse, Goldman Sachs, BNP Paribas, First Tennessee Bank, TD Securities, Morgan Stanley, Nomura, JP Morgan, Cantor Fitzgerald, UBS and HSBC.
Most firms declined to comment, while other financial institutions contacted by The Associated Press did not immediately respond Friday. Some asked for a copy of the lawsuit.
Justice Department spokesman Jeremy Edwards declined comment Friday.
The bonds are a cornerstone for the investment portfolios of government and institutional investors, and Torsella's office said it expects that a large number of governments, public agencies, pension funds and other public institutional investors are victims of the alleged conspiracy.
Thursday's filing is part of an ongoing case in federal court in New York's southern district being led by Torsella's office.
Pennsylvania is seeking class action in the case, which has consolidated lawsuits by various government entities, labor unions and public pension systems, including the city of Baltimore.
It said Pennsylvania's various state agencies bought or sold $63 billion in so-called GSE bonds during the seven-year period. Torsella's office is in the process of determining how much money state agencies lost because of the alleged price-fixing scheme, officials there said.
The Department of Justice hasn't filed any criminal charges and the cooperating co-conspirator is not directly identified in Torsella's court filing.
However, Torsella's filing identifies Deutsche Bank as a co-conspirator and one of various entities that participated in the violations, but that are not named as defendants. A Deutsche Bank spokesman declined comment Friday.
In a March filing in the case, the Alaska Electrical Pension Fund lobbed similar accusations against a nearly identical group of financial firms, saying traders communicated through electronic chatrooms, instant messaging, emails, telephone and in-person meetings.
It went on to name 27 "key personnel" on the desks that traded the bonds in question at 11 firms: Bank of America, Barclays, BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, FTN Securities, Goldman Sachs, JP Morgan, Morgan Stanley and UBS.
They shared "highly sensitive trading information about their own books and about the trading strategies of their customers," positioning themselves to earn "extraordinary trading profits in the secondary market," it said.
Buyers didn't know that the firms' traders had secretly agreed not to compete, and often sought to drive competition among the firms to get a better price, the Alaska Electrical Pension Fund's lawsuit said.
"Little did they know that, behind the scenes, defendants would invariably share their clients' confidential information and coordinate their actions to ensure such efforts to benefit from competition went nowhere," it said.
Associated Press reporter Michael Balsamo in Washington, D.C., contributed to this report.
PARIS (AP) —
Reuters photographer Mohammed Salem captured this year’s prestigious World Press Photo of the Year award Thursday with a depiction of loss and sorrow in Gaza, a heartrending photo of a Palestinian woman cradling the body of her young niece. The photograph, taken in Khan Younis just days after Salem’s own child was born, shows 36-year-old Inas Abu Maamar holding five-year-old Saly, who was killed along with her mother and sister when an Israeli missile struck their home.
Salem, who is Palestinian, described this photo filed Nov. 2 last year, as a “powerful and sad moment that sums up the broader sense of what was happening in the Gaza Strip.”
The image ”truly encapsulates this sense of impact,” said global jury chair Fiona Shields, The Guardian newspaper's head of photography. “It is incredibly moving to view and at the same time an argument for peace, which is extremely powerful when peace can sometimes feel like an unlikely fantasy,” she added.
The World Press Photo jury praised the shot’s sense of care and respect and its offering of a “metaphorical and literal glimpse into unimaginable loss.”
This is not the first time Salem has been recognized for his work on the Israeli-Palestinian conflict; he received a World Press Photo award more than a decade ago for another depiction of the human toll of conflict in the Gaza strip.
In the three other global categories announced Thursday, South Africa’s Lee-Ann Olwage won Photo Story of the Year for her touching series “Valim-babena,” featured in GEO magazine. The project focused on the stigmatization of dementia in Madagascar, a topic she explored through intimate portraits of “Dada Paul” and his family. Lack of public awareness surrounding dementia means that people displaying symptoms of memory loss are often stigmatized.
In the series, “Dada Paul,” who has lived with dementia for 11 years, is tenderly cared for by his daughter Fara. One of the standout images in the series shows him preparing for church with his granddaughter Odliatemix, capturing moments of normalcy and warmth amidst the challenges of dementia.
Photographer Alejandro Cegarra, a Venezuelan native who migrated to Mexico in 2017, won the Long-Term Project award for “The Two Walls,” published by The New York Times and Bloomberg. Cegarra’s project, initiated in 2018, examines a shift in Mexico’s immigration policies, which have moved from being historically open to enforcing strict regulations at its southern border. The jury said the photographer's perspective as a migrant gave it a “sensitive," human-centered perspective, according to a press release.
Julia Kochetova of Ukraine won the Open Format award for “War Is Personal.” The project stood out from coverage of the ongoing conflict by offering a personal look at the harsh realities of war. On a dedicated website, she merged traditional photojournalism with a diary-like documentary style, incorporating photography, poetry, audio clips and music.
The Associated Press won the Open Format award in the regional Africa category with the multimedia story “Adrift,” created by journalists Renata Brito and Felipe Dana. The story investigates the fate of West African migrants who attempted to reach Europe via a treacherous Atlantic route but ended up on a ghost ship discovered off Tobago. The team’s compelling use of photography, cinematography and detailed narrative, enhanced by expert design and multimedia elements, highlights the perils faced by migrants and the human stories behind global migration issues.
The Associated Press' Ebrahim Noroozi won the Asia Stories award for his series “Afghanistan on the Edge,” which documents the country since the Taliban took over in August 2021.
World Press Photo is an independent, nonprofit organization based in the Netherlands, founded in 1955.
This image provided by World Press Photo is part of a series titled Afghanistan on the Edge by Ebrahim Noroozi, Associated Press, which won the World Press Photo Asia Series category and showsAn Afghan refugee rests in the desert next to a camp near the Torkham Pakistan-Afghanistan border, in Torkham, Afghanistan, Friday, Nov. 17, 2023. A huge number of Afghans refugees entered the Torkham border to return home hours before the expiration of a Pakistani government deadline for those who are in the country illegally to leave or face deportation. (AP Photo/Ebrahim Noroozi)
This image provided by World Press Photo is part of a series titled Afghanistan on the Edge by Ebrahim Noroozi, Associated Press, which won the World Press Photo Asia Series category and shows : Since the chaotic Taliban takeover of Kabul on Aug. 15, 2021, an already war-devastated economy once kept alive by international donations alone is now on the verge of collapse. There isn't enough money for hospitals. The World Health Organization is warning of millions of children suffering malnutrition, and the U.N. says 97% of Afghans will soon be living below the poverty line. Three Afghan internally displaced children look with surprise at an apple that their mother brought home after begging, in a camp on the outskirts of Kabul, Afghanistan, Thursday, Feb 2, 2023. (AP Photo/Ebrahim Noroozi)
This image provided by World Press Photo is part of a multimedia project by Associated Press' Renata Brito and Felipe Dana titled Adrift, won the World Press Photo Africa Regional Winner Open Format category and shows a mortuary technician opening the door of a refrigerator used to store the remains of migrants recovered from inside the Mauritania boat that appeared drifting near the island of Tobago, in Scarborough, Trinidad and Tobago, Tuesday, Jan. 25, 2022. In May 2021 a boat from Mauritania full of dead men was found off the coast of the Caribbean Island of Tobago. Who were these men and why were they on the other side of the Atlantic Ocean? Two visual journalists sought answers, uncovering a story about migrants from West Africa who seek opportunity in Europe via an increasingly popular but treacherous Atlantic route. (AP Photo/Felipe Dana)
This image provided by World Press Photo is part of a multimedia project by Associated Press' Renata Brito and Felipe Dana titled Adrift, won the World Press Photo Africa Regional Winner Open Format category and shows young fishermen walk into the ocean to board an artisanal fishing boat in Nouakchott, Mauritania, Friday, Dec. 10, 2021. In May 2021 a boat from Mauritania full of dead men was found off the coast of the Caribbean Island of Tobago. Who were these men and why were they on the other side of the Atlantic Ocean? Two visual journalists sought answers, uncovering a story about migrants from West Africa who seek opportunity in Europe via an increasingly popular but treacherous Atlantic route. (AP Photo/Felipe Dana)
This image provided by World Press Photo is part of a multimedia project by Associated Press' Renata Brito and Felipe Dana titled Adrift, won the World Press Photo Africa Regional Winner Open Format category and shows Moussa Sako, an asylum-seeker from Mali, who survived 22 days aboard a Mauritanian boat drifting in the Atlantic Ocean covers his face during an interview with the Associated Press in Guadalajara, Spain, Sunday, Nov. 14, 2021. In May 2021 a boat from Mauritania full of dead men was found off the coast of the Caribbean Island of Tobago. Who were these men and why were they on the other side of the Atlantic Ocean? Two visual journalists sought answers, uncovering a story about migrants from West Africa who seek opportunity in Europe via an increasingly popular but treacherous Atlantic route. (AP Photo/Felipe Dana)
This image provided by World Press Photo and taken by Julia Kochetova is part of a series titled War is Personal which won the World Press Photo Open Format Award. Amidst tens of thousands of civilian and military casualties and an effective stalemate that has lasted for months, there are no signs of peace on the horizon for Russia's war in Ukraine. While news media updates its audience with statistics and maps, and international attention drifts elsewhere, the photographer has created a personal website that brings together photojournalism with the personal documentary style of a diary to show the world what it is like to live with war as an everyday reality. (Julia Kochetova/World Press Photo via AP)
This image provided by World Press Photo and taken by Julia Kochetova is part of a series titled War is Personal which won the World Press Photo Open Format Award and shows a stabilization point near Bakhmut, Ukraine, of the 5th assault brigade and 77th brigade. Hospitalliers battalion - volunteer battalion of combat medics are helping here. Amidst tens of thousands of civilian and military casualties and an effective stalemate that has lasted for months, there are no signs of peace on the horizon for Russia's war in Ukraine. While news media updates its audience with statistics and maps, and international attention drifts elsewhere, the photographer has created a personal website that brings together photojournalism with the personal documentary style of a diary to show the world what it is like to live with war as an everyday reality. (Julia Kochetova/Der Spiegel/World Press Photo via AP)
This image provided by World Press Photo and taken by Julia Kochetova is part of a series titled War is Personal which won the World Press Photo Open Format Award and shows the training of mobilized conscripts of 68th brigade in Donetsk region, not far from frontline. 68th brigade recently liberated Blagodatne village during the Ukrainian counter-offensive. The instructors came from US, working for NGO "Saber".Amidst tens of thousands of civilian and military casualties and an effective stalemate that has lasted for months, there are no signs of peace on the horizon for Russia's war in Ukraine. While news media updates its audience with statistics and maps, and international attention drifts elsewhere, the photographer has created a personal website that brings together photojournalism with the personal documentary style of a diary to show the world what it is like to live with war as an everyday reality. (Julia Kochetova/Der Spiegel/World Press Photo via AP)
This image provided by World Press Photo and taken by Alejandro Cegarra for The New Times/Bloomberg is part of a series titled The Two Walls which won the World Press Photo Long-Term Project Award and shows Carlos Mendoza, a Venezuelan migrant, crossing the Rio Grande river to seek asylum in the United States. Piedras Negras, Mexico, 7 October 2023. (Alejandro Cegarra/The New York Times/Bloomberg/World Press Photo via AP)
This image provided by World Press Photo and taken by Alejandro Cegarra for The New Times/Bloomberg is part of a series titled The Two Walls which won the World Press Photo Long-Term Project Award and shows a migrant walking atop a freight train known as "The Beast." Migrants and asylum seekers lacking the financial resources to pay a smuggler often resort to using cargo trains to reach the United States border. This mode of transportation is very dangerous; over the years, hundreds have fallen onto the tracks and have been killed or maimed. Piedras Negras, Mexico, 8 October 2023. (Alejandro Cegarra/The New York Times/Bloomberg/World Press Photo via AP)
This image provided by World Press Photo and taken by Lee-Ann Olwage for GEO is part of a series titled Valim-babena which won the World Press Photo Story of the Year Award and shows Dada Paul Rakotazandriny (91), who is living with dementia, and his granddaughter, Odliatemix Rafaraniriana (5), get ready for church on Sunday morning at his home in Antananarivo, Madagascar. 12 March 2023. (Lee-Ann Olwage/Geo/World Press Photo via AP)
This image provided by World Press Photo and taken by Lee-Ann Olwage for GEO is part of a series titled Valim-babena which won the World Press Photo Story of the Year Award and shows Joeline (Fara) Rafaraniriana (41) watches her father, Dada Paul Rakotazandriny (91) clean fish at home on Sunday afternoon. A typical Sunday consists of the family attending church in the morning and spending time together in the afternoon. Fara works during the week and as the sole provider and carer for her daughter and father struggles to manage all her responsibilities in the absence of assistance by her siblings who live close by. Mandrosoa Ivato, Antananarivo, Madagascar. 12 March 2023. (Lee-Ann Olwage/Geo/World Press Photo via AP)
This image provided by World Press Photo and taken by Mohammed Salem of the Reuters news agency won the World Press Photo Award of the Year and shows Palestinian woman Inas Abu Maamar, 36, embracing the body of her 5-year-old niece Saly, who was killed in an Israeli strike, at Nasser hospital in Khan Younis in the southern Gaza Strip, October 17, 2023. (Mohammed Salem/Reuters/World Press Photo via AP)
