Oklahoma Firefighters Pension and Retirement System v. Deutsche Bank Aktiengesellschaft

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

────────────────────────────────────

OKLAHOMA FIREFIGHTERS PENSION AND

RETIREMENT SYSTEM,

23-cv-5095 (JGK)

Plaintiff,

MEMORANDUM OPINION AND

- against - ORDER

DEUTSCHE BANK AKTIENGESELLSCHAFT

(F/K/A DEUTSCHE BANK AG), ET AL.,

Defendants.

────────────────────────────────────

JOHN G. KOELTL, District Judge:

The plaintiff, Oklahoma Firefighters Pension and Retirement

System, a public pension fund for Oklahoma firefighters, brought

this putative class action against five banks and their United

States affiliates. The five banks are Deutsche Bank

Aktiengesellschaft (“DBAG”), Citigroup Global Markets Limited

(“CGML”), RBC Europe Limited (“RBC”), HSBC Bank Plc (“HSBC

Bank”), and Morgan Stanley & Co. International Plc (“MS

International”) (together, the “GEMM Banks”). Complaint

(“Compl.”), Dkt. No. 1 ¶ 25. Their respective United States

Affiliates are Deutsche Bank Securities Inc., Citigroup Global

Markets Inc. (“CGMI”), RBC Capital Markets, LLC, HSBC Securities

(USA) Inc., and Morgan Stanley & Co. LLC. Id.

The plaintiff alleges that the defendants conspired from

January 1, 2009 through December 31, 2013 (the “Class Period”),

in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1, to

fix the price of Gilts, which are government bonds issued by His

Majesty’s Treasury through the United Kingdom Debt Management

Office (“DMO”).

The defendants move to dismiss the putative class action

complaint under Federal Rules of Civil Procedure 12(b)(1),

12(b)(2), 12(b)(3), and 12(b)(6). First, all the defendants

argue that the complaint (1) fails to state a claim, (2) fails

to plead antitrust standing, and (3) is time-barred. Second, the

foreign-entity defendants contend that this Court lacks personal

jurisdiction over them. Third, several foreign defendants claim

that venue is improper in this District. For the reasons

explained below, the motion to dismiss for failure to state a

claim is granted and the complaint is dismissed without

prejudice.

I.

The following description of the factual allegations in the

complaint is accepted as true for purposes of the current

motion.

Gilts are sovereign debt securities denominated in British

pound sterling and issued by the United Kingdom government.

Compl. ¶¶ 12. The DMO handles the issuance process. Id. ¶ 75. By

2014, seventy-two issued Gilts had not yet reached maturity. Id.

¶ 77. Their outstanding value totaled almost one-and-a-half-

trillion sterling pounds. Id. Persons residing in the United

Kingdom held about seventy percent of that value. See id. There

is, however, an active market for Gilts in the United States.

Id. ¶ 93.

Two types of Gilts exist: conventional Gilts and index-

linked Gilts. Id. ¶ 76. Conventional Gilts pay the holder a

fixed cash payment—a coupon—every six months until the maturity

date, at which point the holder receives the final coupon and

the principal. Id. Index-linked Gilts differ in that they adjust

coupons and the principal to account for accrued inflation from

the issue date. See id. During the relevant period, conventional

Gilts comprised approximately seventy-five percent of Gilts in

issue. Id. The maturity date for Gilts can vary widely, ranging

from as little as several months up to fifty-five years. See id.

¶ 77. But most Gilts are long-term bonds. See id.

As with other bonds, dealers and investors price Gilts

based on their par value, coupon, maturity date, and yield. Id.

¶ 103. Lowering a bond’s price increases its yield—the return

that an investor receives by holding the bond to maturity—and

makes its yield competitive with prevailing interest rates. Id.

¶¶ 103–06.

A.

Gilt dealers operate in two markets. In the primary market,

the United Kingdom government issues Gilts at auction. Id. ¶ 3.

For conventional Gilts, the United Kingdom government conducts a

multiple-price auction, where bidders specify the quantity of

bonds they wish to purchase and the prices they are willing to

pay. Id. ¶ 83. The DMO then determines the cutoff yield or price

and accepts the bids above the cutoff. See id. For index-linked

Gilts, the DMO conducts a single-price auction. Id. ¶ 84.

To ensure active participation in primary-market auctions,

the DMO selects a discrete number of banks to serve as Gilt-

edged Market Makers (“GEMMs”). Id. ¶ 85. As of 2013, twenty-one

banks operated as GEMMs, including banks from all five banking

groups named as defendants in this action. Id. ¶ 16. The DMO

obligates GEMMs, once selected, to play an active role in the

issuance, distribution, and marketing of Gilts. Id. ¶ 87. More

specifically, the DMO expects each GEMM to purchase—and requires

each to bid on—at least two percent of both conventional Gilts

and index-linked Gilts on a six-month-rolling-average basis. Id.

And ahead of each specific issuance auction, the DMO designates

a specific number of GEMMs as market makers who must

participate. Id. This ensures that the DMO sells all the Gilts

it auctions at every auction. Id.

The DMO monitors and ranks the performance of GEMMs in

Primary Market auctions. Id. ¶ 91. To achieve a higher ranking,

GEMMs must bid on large amounts of the auctioned bonds at high

prices. See id. The DMO rewards high-ranked GEMMs with financial

incentives; namely, opportunities to participate in even more

lucrative transactions. Id. ¶ 92.

After Gilts are issued in the primary market, bond dealers

and investors trade the security in the secondary market. Id. ¶

93. Participants in the secondary market include various funds,

banks, companies, and state and local governments. Id. Trades

for Gilts occur over the counter, id., meaning that customers

seeking to buy or sell must contact one or more banks directly

and request pricing. Id. ¶ 96.

The difference between the quoted price at which a dealer

will buy a given Gilt outside an auction (the “bid” price) and

the quoted price at which it will sell the same Gilt (the “ask”

price) is called the bid-ask spread. Id. Dealers can earn

profits by collecting the difference between the bid and ask

prices. Id.

The secondary market always stays liquid because the DMO

expects GEMMs to buy and sell on demand all Gilts in which they

have been recognized as a primary dealer. Id. ¶ 95. In addition,

the DMO expects each GEMM to maintain a minimum individual

market share of Gilts available to trade on the secondary

market. Id.

In a free-flowing market, Gilt dealers compete for

customers based on their bid-ask spreads. Id. ¶ 98. Banks that

narrow their spreads—in other words, lower profit margins—gain

customers and business. Id. Conversely, banks that widen their

spreads can earn higher profit margins but risk losing their

customers to rivals that offer narrower spreads. See id.

B.

1.

According to the plaintiff, the GEMM Banks acted as each

banking group’s primary dealer for Gilts during the Class Period

through dealers stationed in London, United Kingdom. Id. ¶¶ 99–

100. The GEMM Banks acquired Gilts in the primary market and

priced trades in the secondary market, distributing Gilts as

needed to fill customer orders through their sales and trading

networks. Id. ¶ 100.

Globally, sales personnel at financial trading hubs like

New York City would interact with investors, manage client

relationships, and administer customer orders. Id. Each United

States Affiliate acted as the American trading hub for each of

the five banking groups during the Class Period. Id. However,

the Foreign Defendants sometimes transacted directly with United

States customers, and at other times transacted with United

States customers through their respective United States

Affiliates. Id. ¶ 102.

The plaintiff alleges that it entered into Gilt

transactions with HSBC Bank, HSBC Securities (USA) Inc., and

CGMI during the five-year Class Period, although the plaintiff

has failed to set forth the details of any purchase or sale of

any Gilt from any defendant at any time. See id. ¶ 28. In

addition, the plaintiff purports to represent a class of all

persons or entities who purchased or sold Gilts in the United

States directly from the defendants during the Class Period. Id.

¶¶ 177–84. The plaintiff excepts from the putative class the

defendants, their employees, affiliates, parents, subsidiaries,

and co-conspirators, as well as the United States Government.

Id. ¶ 177.

2.

The plaintiff alleges that the defendants formed a

horizontal conspiracy to widen artificially the bid-ask spreads

in the secondary market in the United States. Id. ¶¶ 1, 4–6,

107. The plaintiff claims that, pursuant to this conspiracy, the

defendants’ traders first manipulated the price and allocation

of bonds in the primary market. Id. ¶ 112. Then, the defendants

raised their asks and lowered their bids in the secondary

market, acting in concert with the other defendants to extract

additional profits from their customers. Id. ¶¶ 4, 9, 108, 112.

The defendants allegedly carried out this conspiracy by

exchanging highly sensitive information over private chatrooms:

allocations in the primary market, bidding and trading

strategies, customer-order information, their real-time bid and

ask prices, and executed-trade prices. Id. ¶¶ 5–6, 107, 110.

Traders from the other four banks would share confidential

pricing and strategic information with the DBAG trader, who

would then disseminate the information in one-to-one chatrooms

back to the several informants. Id. ¶ 113. Although the

plaintiff says the chatroom exchanges occurred frequently, id. ¶

114, the complaint does not allege specifically when they took

place, nor the content of the communications. Indeed, the

plaintiff fails to allege the contents of any specific

conversation.

3.

In support of its alleged conspiratorial scheme, the

plaintiff offers three main types of evidence. First, the

plaintiff offers circumstantial evidence about the structure of

the Gilt market. It alleges that: prospective dealers face high

barriers to entry, id. ¶¶ 134–35, customers make very large,

infrequent transactions at regular intervals, id. ¶¶ 136–38, and

customers rely on quotes from individual dealers, id. ¶¶ 139–40.

Additionally, the plaintiff alleges that the defendants’ Gilt

traders are closely networked from lateral employment moves,

repetitive dealings, and DMO-sanctioned conferences. Id. ¶¶ 144–

45. The plaintiff also alleges that the defendants’ traders

maintained a high level of direct interfirm communications,

which the defendants failed to monitor despite having the means

to do so. Id. ¶¶ 146–47.

The plaintiff further points out that, as alleged, the

defendants acted contrary to their individual economic

interests. Id. ¶¶ 142–43. By widening their spreads, banks

risked losing customers and GEMM status. Id. And banks that

shared proprietary information did so knowing that their rivals

could profit directly from the anticipated trade to the sharing

bank’s detriment. Id.

Second, the plaintiff claims that Gilt yield curves were

lower during the Class Period, namely 2009 to 2013, when

compared to the two preceding years, namely 2007 and 2008. Id. ¶

148 Fig. 6. The plaintiff concedes, however, that other economic

factors influenced the yield curves and prices of Gilts. Id. ¶

149. For example, the plaintiff concedes that the Bank of

England began quantitative easing in 2009, the first year of the

alleged conspiracy. Id. ¶ 78. Through the practice of

quantitative easing, the Bank of England attempted to combat

inflation by purchasing bonds to drive up their prices, thereby

lowering their yields. Id. Nevertheless, the plaintiff claims

that because the defendants’ alleged cartel comprised about

twenty percent of the total banks designated as GEMMs—five out

of twenty-one—the defendants exerted significant influence and

control over Gilt prices. Id. ¶ 149.

Third, the plaintiff highlights an ongoing United Kingdom

regulatory investigation. On May 24, 2023, the United Kingdom

Competition and Markets Authority (“CMA”), the United Kingdom’s

principal antitrust regulator, announced that it had issued a

Statement of Objections to each of the five defendants following

a five-year investigation which began in November 2018. Id. ¶

117. The CMA also shared its “provisional decision that . . .

[the five] global banks broke competition law by taking part in

a series of one-to-one online exchanges of competitively

sensitive information on pricing and other aspects of their

trading strategies on UK bonds.” Id. ¶ 120.

The accompanying Press Release specified that these

information exchanges “took place in one-to-one Bloomberg

chatrooms between a small number of traders who worked at the

banks,” and that the communications “included details on pricing

and other aspects of their trading strategies.” Id. ¶ 118. The

Press Release added that “[b]y unlawfully exchanging

competitively sensitive information rather than fully competing,

the banks involved in these arrangements could have denied the

full benefits of competition to those they traded with—including

among others, pension funds.” Id. ¶ 119. If in the future the

CMA confirms that a violation occurred, some of the defendants

may face substantial fines. Id. ¶¶ 122–28.

Not all of the defendants may face substantial fines,

however, because as alleged, the CMA granted provisional

immunity under its leniency program to DBAG after DBAG

proactively alerted the CMA to its participation in the

information-sharing scheme. Id. ¶¶ 129–30. CGML then also

applied for leniency and received a discount on any future fines

conditioned on continued cooperation. Id. ¶ 131. CGML

additionally reached a settlement with the CMA which will apply

a further, separate discount to any future fines. Id. These

developments are notable because the plaintiff alleges that the

CMA extends leniency to antitrust cooperators only if the

immunity recipient or settling party admits its participation in

and submits evidence of a cartel in violation of United Kingdom

competition law. Id. ¶ 132.

The plaintiff further alleges that certain defendants have

been fined, sanctioned, pleaded guilty to, or are under

investigation for various other antitrust violations. Id. ¶¶

150–76.

C.

The plaintiff filed this lawsuit on June 16, 2023. The

plaintiff claims it could not have brought this action sooner

because the defendants fraudulently concealed their conduct. Id.

¶¶ 185–93. On September 28, 2023, the defendants filed the

present motion to dismiss. See Joint Mot., Dkt. No. 62.

II.

A.

In deciding a Rule 12(b)(6) motion to dismiss for failure

to state a claim, the Court must accept the allegations in the

complaint as true and draw all reasonable inferences in the

plaintiff’s favor. McCarthy v. Dun & Bradstreet Corp., 482 F.3d

184, 191 (2d Cir. 2007). The Court’s function on a motion to

dismiss is “not to weigh the evidence that might be presented at

a trial but merely to determine whether the complaint itself is

legally sufficient.”1 Goldman v. Belden, 754 F.2d 1059, 1067 (2d

Cir. 1985). To survive a motion to dismiss, the plaintiff’s

complaint “must contain sufficient factual matter, accepted as

true, to state a claim to relief that is plausible on its face.”

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “A claim has facial

plausibility when the plaintiff pleads factual content that

allows the court to draw the reasonable inference that the

defendant is liable for the misconduct alleged.” Id.

While the Court should construe the factual allegations in

the light most favorable to the plaintiff, “the tenet that a

court must accept as true all of the allegations contained in a

complaint is inapplicable to legal conclusions.” Id. When

presented with a motion to dismiss pursuant to Rule 12(b)(6),

1 Unless otherwise noted, this Memorandum Opinion and Order omits all internal

alterations, citations, footnotes, and quotation marks in quoted text.

the Court may consider documents that are referenced in the

complaint, documents that the plaintiff relied on in bringing

suit and that are either in the plaintiff's possession or that

the plaintiff knew of when bringing suit, or matters of which

judicial notice may be taken. See Chambers v. Time Warner, Inc.,

282 F.3d 147, 153 (2d Cir. 2002).

B.

An antitrust plaintiff can survive a motion to dismiss in

two ways. First, a plaintiff can “assert direct evidence that

the defendants entered into an agreement in violation of the

antitrust laws,” with the classic example being “a recorded

phone call in which two competitors agreed to fix prices at a

certain level.” Mayor & City Council of Balt. v. Citigroup,

Inc., 709 F.3d 129, 136 (2d Cir. 2013). “But, in many antitrust

cases, this type of ‘smoking gun’ can be hard to come by,

especially at the pleading stage.” Id. Accordingly, a complaint

may provide a basis for inferring an agreement by alleging

“conscious parallelism, when such interdependent conduct is

accompanied by circumstantial evidence and plus factors.” Id.

Plus factors may include facts like “a common motive to

conspire, evidence that shows that the parallel acts were

against the apparent individual economic self-interest of the

alleged conspirators, and evidence of a high level of interfirm

communications.” Id.

“An antitrust complaint that fails to connect each or any

individual entity to the overarching conspiracy . . . cannot

ordinarily survive a motion to dismiss.” In re Mexican Gov't

Bonds Antitrust Litig. (“MGB”), 412 F. Supp. 3d 380, 388

(S.D.N.Y. 2019). To state a claim post-Twombly, a complaint must

provide a basis to infer “the culpability of the specific

defendants named in the complaint.” Id. “[C]laims as to the

motivations or actions of [the defendants] as a general

collective bloc, or generalized claims of parallel conduct, must

also be set aside . . . as impermissible group pleading.” In re

Interest Rate Swaps Antitrust Litig., No. 16-MC-2704, 2018 WL

2332069, at *15 (S.D.N.Y. May 23, 2018).

Although courts “traditionally treat personal jurisdiction

as a threshold question to be addressed prior to consideration

of the merits of a claim, that practice is prudential and does

not reflect a restriction on the power of the courts to address

legal issues.” ONY, Inc. v. Cornerstone Therapeutics, Inc., 720

F.3d 490, 498 n.6 (2d Cir. 2013). “In cases involving multiple

defendants—over some of whom the court indisputably has personal

jurisdiction—in which all defendants collectively challenge the

legal sufficiency of the plaintiff’s cause of action,” courts

can proceed “directly to the merits on a motion to dismiss.” Id.

III.

Because this Court “indisputably has personal jurisdiction”

over the United States Affiliates, the Court proceeds directly

to the merits of the defendants’ joint motion to dismiss for

failure to state a claim upon which relief can be granted. See

id. “[T]his course of action is particularly appropriate where,

as here, the personal jurisdictional challenges are based on

factual allegations that are, in this early posture, still under

development.” Id.

A.

The plaintiff alleges that the defendants conspired to fix

Gilt spreads and carried out their conspiratorial scheme by

exchanging sensitive information over electronic chatrooms. More

specifically, the plaintiff alleges that “[d]uring the Class

Period, [the] [d]efendants entered into an agreement to reduce

competition among themselves by fixing and manipulating the

prices of Gilt Bonds sold in the United States,” in violation of

the Sherman Act, 15 U.S.C. §§ 1, et seq. Compl. ¶¶ 195–98. The

complaint alleges that this was a price-fixing conspiracy, id. ¶

196–98, which is a per se violation of Sherman Act § 1. United

States v. Socony-Vacuum Oil Co., 310 U.S. 150, 218 (1940).2

But the complaint “is made up of almost entirely conclusory

allegations and is essentially devoid of any evidence, direct or

circumstantial, to support the conclusion that [the defendants]

colluded with one another.” In re ICE LIBOR Antitrust Litig.

(“ICE LIBOR”), No. 19 Civ. 439, 2020 WL 1467354, at *4 (S.D.N.Y.

Mar. 26, 2020). There is not a single conversation or document

described in detail, nor any individual trade or pricing

decision reported with specificity.

1.

The plaintiff fails to allege direct evidence of a

conspiracy. “Direct evidence of a conspiracy is explicit and can

show one exists without any inferences.” City of Pontiac Police

& Fire Ret. Sys. v. BNP Paribas Sec. Corp., 92 F.4th 381, 391

(2d Cir. 2024). Here, the plaintiff points to the CMA’s

investigation into the defendants’ information exchange

2 Alternatively, the plaintiff alleges that the conspiracy was an unreasonable

restraint of trade because the conspiracy resulted in substantial

anticompetitive effects in the Gilt market with no legitimate business

justification for, nor procompetitive benefits from, the defendants’ conduct.

Compl. ¶¶ 195, 198. “The exchange of price data and other information among

competitors does not invariably have anticompetitive effects” and thus

“do[es] not constitute a per se violation of the Sherman Act.” See United

States v. U.S. Gypsum Co., 438 U.S. 422, 441 n.16 (1978). In restraint-of-

trade cases, courts apply the rule of reason and weigh harms against benefits

to determine whether the practice alleged is an “undue restraint.” Standard

Oil Co. of N.J. v. United States, 221 U.S. 1, 60–62 (1911). However, the

complaint fails to engage in any particularized factual analysis of the

alleged particular restraints on the United States secondary market for

Gilts, much less a comparison to justifications and benefits.

concerning Gilts. Compl. ¶¶ 117–28. It adds that under United

Kingdom law, both DBAG and CGML “admitted participation in a

cartel that agreed to prevent, restrict, or distort competition

in the Gilt Bonds market.” Id. ¶ 132.

The ongoing investigation, and even the cooperation of two

named defendants, is not direct evidence that any of the

defendants participated in the price-fixing conspiracy alleged

in this case. See In re Elevator Antitrust Litig., 502 F.3d 47,

51–52, 51 n.6 (2d Cir. 2007); MGB, 412 F. Supp. 3d at 389. A

foreign-government investigation cannot by itself “support an

allegation of a plausible conspiracy.” See In re European Gov’t

Bonds Antitrust Litig. (“EGB II”), No. 19 Civ. 2601, 2022 WL

768680, at *21 (S.D.N.Y. Mar. 14, 2022).

Moreover, the complaint overstates the CMA’s provisional

findings. The CMA is investigating the exchange of confidential

information in violation of United Kingdom regulations that

prevent such exchanges.3 CMA, CMA provisionally finds 5 banks

broke competition law on UK bonds, (May 24, 2023),

https://www.gov.uk/government/news/cma-provisionally-finds-5-

banks-broke-competition-law-on-uk-bonds (“Press Release”). There

is no finding that the banks conspired to fix spreads on Gilts

sold in the United States as alleged in this case. Id.

3 At oral argument, the plaintiff’s counsel conceded that the United Kingdom

competition law is “broader”—that is, renders illegal a wider range of

conduct—than section 1 of the Sherman Act.

Likewise, the wrongdoing that DBAG and CGML allegedly

admitted, and that the CMA provisionally found, is that the

defendants “unlawfully shared competitively sensitive

information.” Compl. ¶¶ 7, 132. “Information exchange is an

example of a facilitating practice that can help support an

inference of a price-fixing agreement,” not direct evidence of

one. See Todd v. Exxon Corp., 275 F.3d 191, 198 (2d Cir. 2001).

Chats that share sensitive information—at best—“suggest the

sharing of information that could lead to coordinated trading

and bidding,” not direct coordination itself. In re Treasury

Sec. Auction Antitrust Litig. (“Treasury II”), 595 F. Supp. 3d

22, 46 (S.D.N.Y. 2022), aff’d, 92 F.4th 381 (2d Cir. 2024). In

this case, no defendant admitted, nor did the CMA find, that any

defendant conspired over five years to fix the spread on Gilts

traded in the United States.

In this case, the complaint does not contain “the rare

smoking gun,” like chats that “unmistakably show traders, acting

on behalf of [the defendants], agreeing to fix prices at a

specific level.” Cf. In re GSE Bonds Antitrust Litig. (“GSE”),

396 F. Supp. 3d 354, 361 (S.D.N.Y. 2019); In re London Silver

Fixing, Ltd., Antitrust Litig., 332 F. Supp. 885, 892–94, 901

(S.D.N.Y. 2018). Accordingly, the complaint fails to set forth

direct evidence of a price-fixing conspiracy.

2.

Having alleged no direct evidence, the plaintiff must

“present circumstantial facts supporting the inference that a

conspiracy existed.” Mayor & City Council of Balt., 709 F.3d at

136. To do so, the plaintiff must plead (1) parallel conduct and

(2) “plus factors.” Id. Here, the plaintiff has failed to allege

any facts to show that the defendants engaged in parallel

conduct that suggests the existence of a price-fixing conspiracy

and each defendant’s participation in that conspiracy. See MGB,

412 F. Supp. 3d at 389.

The complaint does not identify any specific quote by any

defendant to any customer, nor does it plead that any two

defendants ever coordinated prices on Gilts traded in the United

States. Indeed, the complaint contains no individualized

allegations of any specific quotes, transactions, or chats. The

complaint is instead replete with conclusory group allegations

that the defendants “fixed bid-ask spreads on customer orders

for Gilt Bonds in the post-auction, secondary market,” and

orchestrated this price-fix “primarily through non-public,

invitation-only, cross-bank electronic chatrooms.” Compl. ¶ 107;

see also id. ¶¶ 4–5, 28, 177.

This kind of barebones group pleading of parallel conduct

is insufficient. Treasury II, 595 F. Supp. 3d at 44, 50–51.

Without any allegations relating to specific actions taken by

each defendant, group pleading fails to “tie[] each defendant to

the conspiracy” by showing that each defendant engaged in

parallel conduct. See GSE, 396 F. Supp. 3d at 364. The complaint

in this case does not substantiate its price-fixing claims with

any pricing or trading data specific to any defendant, and

therefore fails to “articulate a link between the[] allegations

and the specific defendants named in the complaint.” See MGB,

412 F. Supp. 3d at 389. The plaintiff fails to point to any

comparable complaint that has found parallel conduct absent

specific factual allegations of such parallel trading or

pricing.

The plaintiff notes correctly that it is not required to

plead statistical analyses at this stage of the litigation. But

the plaintiff must somehow establish parallel conduct in which

each defendant participated. See GSE, 396 F. Supp. 3d at 364–65

(“At this stage, a statistical analysis, like any other

allegation, need only be plausible.”). The plaintiff here fails

to do that with its single chart, which merely displays the

yield curve for Gilts during the Class Period and the two

preceding years.4 See Compl. ¶ 148 Fig. 6.

As the defendants correctly point out, the yield curves “do

not distinguish at all between defendant and non-defendant

dealers.” GSE, 396 F. Supp. 3d at 365. Such “aggregate

statistics do not alone suffice to impute wrongful conduct to

any particular defendant.” In re European Gov’t Bonds Antitrust

Litig. (“EGB I”), No. 19 Civ. 2601, 2020 WL 4273811, at *17

(S.D.N.Y. Jul. 23, 2020). Accordingly, “in the absence of any

other allegations that would allow the Court to infer the

participation of the individual [d]efendants, . . . the group

statistical pleadings cannot carry the day.” MGB, 412 F. Supp.

3d at 390.

Moreover, the plaintiff’s statistical allegations defeat

themselves. “[T]here is an obvious alternative explanation to

the alleged conspiratorial conduct” supposedly demonstrated by

the yield-curves chart. See Cenedella v. Metro. Museum of Art,

348 F. Supp. 3d 346, 359 (S.D.N.Y. 2018). The plaintiff argues

that the yield curves for Gilts fell after the defendants formed

4 At oral argument, and in a supplemental submission, Dkt. No. 82 at 2, the

plaintiff’s counsel conceded that the complaint included the yield curves to

demonstrate motive only, and not parallel conduct. But the complaint plainly

intended to use the chart to show both motive and parallel conduct.

Immediately following the yield-curves chart, the complaint alleges that the

“[d]efendants possessed enough market power to inflate the prices of Gilt

Bonds above what their true value would be, and was, in a competitive

market.” Compl. ¶ 149. In any event, the yield curves chart fails to

demonstrate parallel conduct.

a price-fixing conspiracy. But the complaint also alleges that

the “Bank of England actively participates in the Gilt Bonds

market through open market operations,” the Bank “first began

utilizing quantitative easing in March 2009,” and the “[u]se of

quantitative easing was widespread during the Class Period.”

Compl. ¶ 78.

Quantitative easing “involves purchasing bonds to push up

their prices” and “reduce long-term interest rates.” Id. Pushing

up bond prices lowers their yields. Id. ¶ 105. Therefore, by the

plaintiff’s own admission, quantitative easing is “an obvious

alternative explanation” for why yield curves fell during the

Class Period. See Cenedella, 348 F. Supp. 3d at 359. This

obvious explanation renders even less plausible the inference

that yield curves fell because the defendants conspired to fix

spreads.

The plaintiff’s failure to plead parallel conduct is even

more striking given the implausibly wide-ranging conspiracy

alleged. In Alaska Department of Revenue, Treasury Division v.

Manku, the plaintiffs alleged that the defendants formed a

“super-desk involving more than twenty entities in different

countries as well as individual traders, conspiring every day,

nearly all day, tainting every one of their trades for some

seven years.” No. 20-1759-cv, 2021 WL 3027170, at *4 (2d Cir.

Jul. 19, 2021) (summary ord.). Considering the all-encompassing

nature of the conspiracy alleged, the court called it “simply

not plausible.” Id.

As in Alaska Department, the plaintiff alleges a wide-

ranging conspiracy whereby the five defendant banking groups

tainted Gilt trades with their clients in the United States over

a five-year period. Compl. ¶¶ 5, 28, 107, 112, 177. The

plaintiff seeks to represent a class of “[a]ll persons or

entities who purchased or sold Gilt Bonds in the United States

directly from [the] [d]efendants from at least as early as

January 1, 2009, through at least December 31, 2013.” Id. ¶ 177.

Here, as in Alaska Department, the Court must “evaluate [the

plaintiff’s] claims as they are alleged: an antitrust conspiracy

involving all defendants and affecting all trades with the

defendants.” Alaska Dep’t, 2021 WL 3027170, at *4.

The plaintiff’s factual allegations fail to render

plausible such a wide-ranging conspiracy. The complaint does not

explain how the defendants “were able to wield such control over

the secondary market”—that is, how five out of twenty-one GEMMs

could “impact every [United States] trade with every defendant”

for five years without losing customers to the sixteen non-

participating banks. See id. Such control is especially

implausible given that the complaint alleges that each GEMM must

buy and sell Gilts on demand and maintain a minimum individual

market share of Gilts available to trade on the secondary

market. Compl. ¶ 95. Although a plaintiff can allege plausibly

that “a numerical minority of dealers” control “most of the

market,” see GSE, 396 F. Supp. 3d at 362, the complaint contains

no such plausible allegation in this case. Its other allegations

render implausible the inference that the five defendant groups

conspired to dominate the market. See City of Pontiac, 92 F.4th

at 397–400.

In sum, the plaintiff offers only “skeletal allegations of

the possibility of a conspiracy.” ICE LIBOR, 2020 WL 1467354, at

*7. Much more is required, namely, specific allegations that

demonstrate parallel conduct and tie each defendant to the

alleged price-fixing scheme. MGB, 412 F. Supp. 3d at 391.

“Because [the plaintiff] fail[s] to allege parallel conduct with

respect to the alleged [section 1] conspiracy, [it] cannot

demonstrate an agreement to conspire based on indirect evidence

irrespective of [its] plus factors.” City of Pontiac, 92 F.4th

at 401.

3.

Moreover, the plaintiff also fails to plead adequate plus

factors that suggest the formation of a price-fixing conspiracy.

General plus factors indicate only that the market as a whole

may be susceptible to collusion, and thus “are not enough.” EGB

II, 2022 WL 768680, at *20. The complaint must plead “plus

factors for each defendant.” Id. Such specific plus factors must

support the plausible inference that each named defendant

entered the alleged conspiracy. See Mayor & City of Balt., 709

F.3d at 136–40.

The plaintiff fails to allege specific plus factors against

any of the defendants. It points to the CMA’s preliminary

findings, but that investigation concerns the exchange of

information about conventional Gilts, not a price-fixing

conspiracy covering the secondary market for all Gilts traded by

the defendants in the United States. Moreover, by definition, a

provisional finding is subject to change. And “the mere fact

that regulatory entities are investigating the possibility of .

. . misconduct . . . is not a plus factor.” In re London Silver

Fixing, Ltd., Antitrust Litig., 213 F. Supp. 3d 530, 561

(S.D.N.Y. 2016); MGB, 412 F. Supp. 3d at 390; In re Commodity

Exch., Inc., 213 F. Supp. 3d 631, 662 (S.D.N.Y. 2016).

The investigation is not a specific plus factor even as to

the two banks participating in the CMA’s leniency program.

Although the real-time exchange of pricing information is the

classic “example of a facilitating practice that can help

support an inference of a price-fixing agreement,” Todd, 275

F.3d at 198, the public evidence in this case is limited in time

and scope. DBAG admitted that its trader exchanged information

about conventional Gilts over chatroom conversations lasting

less than one year with CGML and HSBC Bank, more than one year

with MS International, and more than three years with RBC. Press

Release. CGML likewise admitted one-to-one conversations with

DBAG and MS International that both lasted less than one year.

Id. These admitted chats—spanning various time periods and

involving five out of twenty-one GEMM banks, only two of which

have conceded some wrongdoing under British competition law—do

not give rise to the plausible inference that any bank conspired

to fix the spread on every Gilt transaction involving the

defendant banks in the United States for five years.5 See City of

Pontiac, 92 F.4th at 399–400; In re Elevator Antitrust Litig.,

502 F.3d at 51–52, 51 n.6.

The plaintiff’s general plus factors are also insufficient

to show that any individual defendant participated in a price-

fixing conspiracy in the United States. That yield curves fell

and remained depressed during the alleged conspiracy period is

not a plus factor in view of the obvious explanation supplied by

the Bank of England’s quantitative-easing program. Also

unavailing is the plaintiff’s argument that increased Gilt

prices provided an economic incentive to collude. While

5 At oral argument, the plaintiff’s counsel emphasized CGML’s settlement as a

plus factor. The complaint alleges that under United Kingdom law, settlement

“is the process whereby a business under investigation is prepared to admit

that it has breached competition law.” Compl. ¶ 131. This allegation fails as

a plus factor for the same reason as the leniency-program allegations. The

public evidence in the CMA’s investigation does not suggest plausibly that

the conspiracy alleged in this case—namely, a price-fixing conspiracy with

respect to the purchase and sale of Gilts in the United States—existed.

depressed yield curves do demonstrate elevated Gilt prices, they

do not show that individual defendants were able to use such

prices to profit, particularly when they would have faced

competition from the numerous other participants in the market

who are not alleged to be members of the conspiracy.

The plaintiff points to other investigations and findings,

but these are also not plus factors. The defendants’ alleged

wrongdoing in other markets “does not constitute evidence that”

they conspired to fix spreads in the Gilt market. In re

Commodity Exch., 213 F. Supp. 3d at 661. The Court of Appeals

for the “Second Circuit has expressly rejected this sort of ‘if

it happened there, it could have happened here’ reasoning.” MGB,

412 F. Supp. 3d at 391 (citing In re Elevator Antitrust Litig.,

502 F.3d at 52).

Relying on Federal Rule of Evidence 404(b), the plaintiff

asserts that evidence of wrongdoing in other markets constitutes

a plus factor. But “absent any evidence of linkage,” allegations

of wrongdoing in other markets do not plausibly suggest

wrongdoing in this market. In re Elevator Antitrust Litig., 502

F.3d at 52. Insofar as the Rules of Evidence have any bearing at

the motion-to-dismiss stage at all, Rule 404(b) does not permit

the use of bad acts to show propensity. Fed. R. Evid. 404(b).

Indeed, the more pertinent rules here are Rules 401 and 403. To

the extent that the plaintiff relies on other bad acts to show

motive or opportunity, such allegations are simply not relevant,

or at least not relevant enough to justify consideration as a

plus factor. See In re Elevator Antitrust Litig., 502 F.3d at 51

n.6, 52.

The plaintiff relies on cases decided by courts in other

circuits. Milliken & Co. v. CNA Holdings, Inc., No. 3:08-CV-578,

2011 WL 3444013, at *10 (W.D.N.C. Aug. 8, 2011); In re Flash

Memory Antitrust Litig. (“FM”), 643 F. Supp. 2d 1133, 1148–49

(N.D. Cal. 2009); In re Static Random Access Memory Antitrust

Litig. (“SRAM”), 580 F. Supp. 2d 896, 903 (N.D. Cal. 2008). But

those courts considered other conspiracies as a plus factor in

relation to the alleged conspiracies because they were linked

“close[ly] in time, geographic area, and involved several of the

same entities,” Milliken & Co., 2011 WL 3444013, at *10, or they

involved the same employees alleged to have conspired. FM, 643

F. Supp. 2d at 1149; SRAM, 580 F. Supp. 2d at 903.

In this case, although the other conspiracies ran roughly

concurrently with the one alleged in this case, the plaintiff

does not allege that the same traders were involved. To the

contrary, the plaintiff alleges that Gilt traders operated

independently from other bond traders within each bank’s fixed-

income divisions. See Compl. ¶¶ 99–102. Nor does the plaintiff

allege that the other cases and investigations concern “the very

conduct alleged” here: conspiring to fix the spread of Gilts in

the United States. Cf. In re Foreign Exch. Benchmark Rates

Antitrust Litig. (“FX”), 74 F. Supp. 3d 581, 590–94 (S.D.N.Y.

2015) (crediting as circumstantial evidence “detailed

allegations of investigations into the manipulation of FX

benchmark rates by regulators in seemingly every significant

financial market in the world”). In similar cases involving

financial instruments, courts in this District have viewed other

alleged conspiracies formed by the same banking families without

more as a nonfactor. See, e.g., MGB, 412 F. Supp. 3d at 391; In

re Commodity Exch., Inc., 213 F. Supp. 3d at 661. The Court does

so again here.

Finally, the plaintiff points to certain structural

factors. While some of them have been considered as plus factors

in other cases, see EGB II, 2022 WL 768680, at *20, they do not

amount to sufficient indicia that the individual defendants

entered into the price-fixing conspiracy alleged in this case.

Because the complaint fails to allege both parallel conduct

and adequate plus factors, the plaintiff has “not nudged [its]

claims across the line from conceivable to plausible,” and thus

its “complaint must be dismissed.” Twombly, 550 U.S. at 570.

Accordingly, the motion to dismiss the complaint for failure to

allege a plausible price-fixing conspiracy is granted.

B.

The defendants also contend that the plaintiff lacks

antitrust standing to bring this suit because the plaintiff did

not suffer an antitrust injury. Defs’ Joint Memorandum, Dkt. No.

63, at 15–18. “An antitrust plaintiff must show . . . antitrust

standing at the pleading stage.” In re Aluminum Warehousing

Antitrust Litig., 833 F.3d 151, 157 (2d Cir. 2016). To meet the

antitrust standing requirement, the plaintiff must allege

plausibly (1) that it suffered an antitrust injury, and (2) that

it is an “efficient enforcer[] of the antitrust laws.” Id. “In

determining antitrust standing, [courts] assume the existence of

an antitrust violation.” Harry v. Total Gas & Power N. Am.,

Inc., 889 F.3d 104, 115 (2d Cir. 2018).

To allege an antitrust injury, the plaintiff must first

allege plausibly that it was “injured.” See 15 U.S.C. § 15. The

complaint must make out the plaintiff’s injury based on factual

allegations, not mere conclusory allegations that restate the

necessary legal principles. See Iqbal, 556 U.S. at 678–80.

Additionally, the plaintiff’s injury must be the type of injury

that “the antitrust laws were intended to prevent and that flows

from that which makes [the] defendants’ acts unlawful.”

Brunswick Corp. v. Pueblo Bowl–O–Mat, Inc., 429 U.S. 477, 489

(1977). “The need for this showing is at least as great under

the per se rule as under the rule of reason.” Atl. Richfield Co.

v. USA Petrol. Co., 495 U.S. 328, 344 (1990).

In this case, the plaintiff alleges that it was injured

when it entered into Gilt transactions with several of the

defendants at fixed prices. Compl. ¶¶ 28, 116. These conclusory

allegations clear the “low threshold” required to show Article

III injury in fact. See John v. Whole Foods Mkt. Grp., Inc., 858

F.3d 732, 736–38 (2d Cir. 2017).6 The plaintiff’s injury

allegations place a concrete and particularized injury “within

the realm of possibility.” See Harry, 889 F.3d at 111. While

“that is enough” to show Article III injury in fact for

jurisdictional purposes, it is not enough to allege a plausible

antitrust injury on the merits. See id. at 111, 116. Much more

factual matter is required to allege plausibly that the

plaintiff suffered an antitrust injury. See id. at 116.

The complaint does not point to any transaction in which

the plaintiff paid too much or received too little when it

bought or sold a Gilt with any of the defendants. Indeed, the

plaintiff could not in any event, having failed to allege

plausibly any episodic price-fixing that affected the

plaintiff’s own trades.

6 The defendants do not contend that the plaintiff has failed to allege a

factual basis sufficient to show that it suffered a harm for purposes of

alleging Article III standing. The pleading standard for constitutional

standing is lower than the standard necessary to plead the injury required to

state a substantive cause of action. See Harry, 889 F.3d at 110–11.

Nor do the plaintiff’s general allegations that it traded

with some of the defendants at some unspecified times during the

Class Period suffice to make out antitrust injury. The plaintiff

has failed to allege a plausible price-fixing conspiracy that

affected the entire market for Gilts in the United States over a

five-year period.

Some courts have viewed general allegations that the

plaintiffs directly transacted in the manipulated market at some

point during the conspiracy period as sufficient to make out

antitrust injury at the motion-to-dismiss stage. See, e.g., FX,

74 F. Supp. 3d at 587, 595–98; GSE, 396 F. Supp. 3d at 366–67.

But in such cases, the plaintiffs plausibly alleged a pervasive

conspiracy that infected the pertinent markets for the entirety

of the alleged conspiracy periods. See FX, 74 F. Supp. 3d at

590–94 (concluding that the complaint “adequately allege[d] that

[the] [d]efendants engaged in a long-running conspiracy to

manipulate” the prices of FX instruments); GSE, 396 F. Supp. 3d

at 361–63.

This case is not like FX, GSE, and similar cases. The

plaintiff has failed to allege a plausible five-year conspiracy

to fix spreads in the United States Gilt market. In the absence

of a plausibly pleaded pervasive price-fixing conspiracy, the

plaintiff’s general allegations of injury do not show that it

suffered an antitrust injury. And because the complaint does not

set out the details of the plaintiff’s specific trades, “let

alone a connection between [the] [d]efendants’ unlawful conduct

and that non-injury,” it fails to allege any plausible episodic

antitrust injury. Cf. Harry, 889 F.3d at 116.

The plaintiff has failed to allege plausibly that it

suffered an antitrust injury. Therefore, the motion to dismiss

for failure to plead antitrust injury is granted.

IV.

Because the complaint must be dismissed for failure to

state a plausible price-fixing conspiracy, it is unnecessary to

reach the remaining bases for dismissal, including whether the

complaint is time-barred. It is also unnecessary to reach the

additional claims by the foreign defendants that the complaint

should be dismissed for lack of personal jurisdiction over them

and for improper venue.

Leave to amend should be freely given when justice so

requires. Fed. R. Civ. P. 15(a)(2). Because the plaintiff has

not “repeated[ly] fail[ed] to cure deficiencies” to an extent

warranting dismissal with prejudice, see Foman v. Davis, 371

U.S. 178, 182 (1962), the plaintiff’s amended complaint is

dismissed without prejudice.

CONCLUSION

The Court has considered all of the arguments raised by the

parties. To the extent not specifically addressed, the arguments

are either moot or without merit. For the foregoing reasons, the

defendants’ joint motion to dismiss the plaintiff’s complaint

for failure to state a-claim is granted, the various defendants’

motion to dismiss for lack of personal jurisdiction and for

improper venue is denied as moot, and the complaint is dismissed

without prejudice.

If the plaintiff wishes to file an amended complaint, the

plaintiff must file a motion to amend, including a copy of the

amended complaint and explaining how the amended complaint

solves the deficiencies noted in this opinion, by October 4,

2024. The defendants may respond by October 25, 2024. The

plaintiff may reply by November 4, 2024. If the plaintiff does

not move to file an amended complaint by October 4, 2024, the

current complaint will be dismissed with prejudice.

The Clerk is directed to close all pending motions.

SO ORDERED.

Dated: New York, New York (AC (2. 5

September 13, 2024

John G. Koeltl

Uni States District Judge

34