Stock loan antitrust lawsuit dismissed
08 August 2019 New York
Image: Shutterstock
QS Holdco’s legal action against Bank of America Corporation over antitrust claims has been dismissed following a district court ruling.
QS Holdco filed an antitrust suit, in the US District Court for the Southern District of New York, asserting that several financial services companies, including Goldman Sachs, EquiLend and Merrill Lynch, boycotted it’s formerly owned stock lending platform, AQS.
US circuit judge Richard Sullivan granted the Bank of America’s motion to dismiss QS Holdco’s complaint as it was found that the cases claims don’t belong to the company that brought them.
According to QS Holdco, in 2006, Quadriserv began developing an electronic platform that would directly match borrowers and lenders in the stock loan market.
Quadriserv also pursued and then adopted an electronic clearinghouse for AQS that eliminated the risk of default by independently backing each trade with capital.
In the complaint, QS Holdco alleged that AQS’s launch in 2009 threatened defendants’ powerful role as intermediaries in the market.
The complaint claimed that as a result, defendants conspired to boycott AQS and met with AQS executives to gain intelligence and “feign[ed] interest in the platform, only to “refuse to give their customers access to AQS”.
Additionally, QS Holdco alleged that the defendants scheduled meetings to “develop [a] uniform position” on platforms like AQS.
These meetings and other conspiratorial acts allegedly occurred in part at board meetings for EquiLend, a dealer consortium that offered its own trading platform but which did not use central clearing or real time price data.
In 2015, Quadriserv began negotiations with the OCC for the sale of AQS, which made the defendants feel threatened by this possibility and so made calls to thwart the deal, QS Holdco alleged.
After QS Holdco acquired AQS from Quadriserv in July, “OCC abruptly pulled out of the deal”, and when Equilend Clearing LLC offered to buy AQS in 2016, QS Holdco alleged it was forced to sell at a loss.
OCC and EquiLend came to their own deal, which QS Holdco alleged was “substantially identical” to the one they had pursued, and following this OCC began to use AQS’s services.
Meanwhile, the defendants argued that the court lacks subject matter jurisdiction over this dispute because QS Holdco assigned all its claims to EquiLend when it sold AQS.
Judge Sullivan also noted in the court document that the language of all agreements supports only one conclusion: all claims (including antitrust claims) were assigned from Quadriserv to QS Holdco in 2015 and from QS Holdco to EquiLend in 2016.
In addition, it was highlighted that while the eventual transfer of claims was identical to EquiLend’s purchase of AQS, the transfer is not alleged to have been the goal of the scheme nor was it necessary the boycott.
It was also indicated in the court document that nothing prevented QS Holdco or Quadriserv from pursuing its antitrust claims prior to the sale, particularly since Quadriserv, the original owner of AQS, was on notice of the conspiracy as early as 2009.
Elsewhere in the document, Judge Sullivan wrote: “In short, Plaintiff has alleged no facts to support an application of this rare doctrine [...] or any other basis to invalidate the legitimate transfer or claims reflected in agreements for which Plaintiff received consideration.”
Judge Sullivan concluded: “Accordingly, because Plaintiff assigned the antitrust claims at issue here to EquiLend Clearing LLC, Plaintiff is no longer the real part in interest, and its claims must be dismissed pursuant to Rule 17(a).”
QS Holdco filed an antitrust suit, in the US District Court for the Southern District of New York, asserting that several financial services companies, including Goldman Sachs, EquiLend and Merrill Lynch, boycotted it’s formerly owned stock lending platform, AQS.
US circuit judge Richard Sullivan granted the Bank of America’s motion to dismiss QS Holdco’s complaint as it was found that the cases claims don’t belong to the company that brought them.
According to QS Holdco, in 2006, Quadriserv began developing an electronic platform that would directly match borrowers and lenders in the stock loan market.
Quadriserv also pursued and then adopted an electronic clearinghouse for AQS that eliminated the risk of default by independently backing each trade with capital.
In the complaint, QS Holdco alleged that AQS’s launch in 2009 threatened defendants’ powerful role as intermediaries in the market.
The complaint claimed that as a result, defendants conspired to boycott AQS and met with AQS executives to gain intelligence and “feign[ed] interest in the platform, only to “refuse to give their customers access to AQS”.
Additionally, QS Holdco alleged that the defendants scheduled meetings to “develop [a] uniform position” on platforms like AQS.
These meetings and other conspiratorial acts allegedly occurred in part at board meetings for EquiLend, a dealer consortium that offered its own trading platform but which did not use central clearing or real time price data.
In 2015, Quadriserv began negotiations with the OCC for the sale of AQS, which made the defendants feel threatened by this possibility and so made calls to thwart the deal, QS Holdco alleged.
After QS Holdco acquired AQS from Quadriserv in July, “OCC abruptly pulled out of the deal”, and when Equilend Clearing LLC offered to buy AQS in 2016, QS Holdco alleged it was forced to sell at a loss.
OCC and EquiLend came to their own deal, which QS Holdco alleged was “substantially identical” to the one they had pursued, and following this OCC began to use AQS’s services.
Meanwhile, the defendants argued that the court lacks subject matter jurisdiction over this dispute because QS Holdco assigned all its claims to EquiLend when it sold AQS.
Judge Sullivan also noted in the court document that the language of all agreements supports only one conclusion: all claims (including antitrust claims) were assigned from Quadriserv to QS Holdco in 2015 and from QS Holdco to EquiLend in 2016.
In addition, it was highlighted that while the eventual transfer of claims was identical to EquiLend’s purchase of AQS, the transfer is not alleged to have been the goal of the scheme nor was it necessary the boycott.
It was also indicated in the court document that nothing prevented QS Holdco or Quadriserv from pursuing its antitrust claims prior to the sale, particularly since Quadriserv, the original owner of AQS, was on notice of the conspiracy as early as 2009.
Elsewhere in the document, Judge Sullivan wrote: “In short, Plaintiff has alleged no facts to support an application of this rare doctrine [...] or any other basis to invalidate the legitimate transfer or claims reflected in agreements for which Plaintiff received consideration.”
Judge Sullivan concluded: “Accordingly, because Plaintiff assigned the antitrust claims at issue here to EquiLend Clearing LLC, Plaintiff is no longer the real part in interest, and its claims must be dismissed pursuant to Rule 17(a).”
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