Major investment banks, including Goldman Sachs and Morgan Stanley, have hired prominent antitrust lawyers to defend themselves against a class action lawsuit alleging collusion in the securities lending market.

The Iowa Public Employees' Retirement System (IPERS) and two California-based pension funds are seeking compensation for investors allegedly damaged by what they describe as a “lack of competition and transparency” in the stock lending market.

The defendants - Bank of America, Credit Suisse, Goldman Sachs, JP Morgan, Morgan Stanley, UBS and EquiLend (a stock loan platform owned by the banks) – have started to assemble their own legal teams in response.

Richard Pepperman, partner at Sullivan & Cromwell, told Global Investor his firm will be defending Goldman Sachs.

Pepperman is an expert in securities and derivative law and antitrust matters and has represented the bank previously around short selling litigation.

He also represented JPMorgan Chase in litigation arising out of the bank’s 2012 so-called “London Whale” trading losses.

Attorneys at Winston & Strawn have also been hired by Goldman in the case against IPERS, the Orange County Employees Retirement System and the Sonoma County Employees' Retirement Association.

Morgan Stanley has hired Cravath, Swaine & Moore. Damaris Hernandez, a partner at the law firm, previously represented Credit Suisse in defense of actions relating to residential mortgage‑backed securities in the US.

Attorneys at Shearman & Sterling have been hired to work for Bank of America.  Richard Franklin Schwed has represented the firm before in an antitrust class action litigation related to foreign currency exchange (FX) trading.

Meanwhile, Credit Suisse has hired lawyers at Cahill, including Elai Catz who has represented clients in a variety of antitrust disputes, including complex class actions alleging price fixing and monopolization.

Two law firms, Cohen Milstein Sellers & Toll and Quinn Emanuel Urquhart & Sullivan, are representing the pension fund plaintiffs. 

“Major investment banks are conspiring to preserve their profits at the expense of everyday investors,” Michael B. Eisenkraft, plaintiffs’ attorney and a partner at Cohen Milstein Sellers & Toll, said in a statement in August.

“Through various improper means, the likes of Goldman Sachs and Morgan Stanley have for years colluded to maintain their power over this little-known-but-lucrative corner of Wall Street. In doing so, they deprive investors of money that should flow to retirees, families and other hard-working Americans.” 

Judge Katherine Polk Failla has now been assigned to the case.  

A pretrial conference, originally set for November, has been rescheduled and will take place on January 10 at the US District Court for the Southern District of New York.