Data provider may skirt U.S. penalties for unfair practices

October 17, 2013

California financial services professionals learned recently that a provider of data services that is controlled by several Wall Street firms including JPMorgan Chase and Goldman Sachs was expected to avoid federal antitrust sanctions for allegedly stifling competition in the credit-derivatives market, according to sources in the know. The allegedunfair practices engaged in by Markit Group Ltd. were said to be aimed at keeping down rivals in the $22 trillion financial sector. Authorities in the European Commission, however, were expected to bring sanctions against the London-based company pursuant to a separate investigation.

The U.S. Justice Department's antitrust division was reportedly satisfied that its concerns about Markit's business practices were already being addressed by the Dodd-Frank Act, federal legislation that was enacted in 2010 as a response to the worldwide financial crisis. The probe conducted by the Justice Department was civil rather than criminal.

Markit Group's services include providing its customers with bond and derivative data as well as selling licenses to firms that want to share its credit-swap indexes with their clients. Credit-swap indexes are the financial market's most actively traded contracts. In their probe, investigators examined whether the big banks that owned Markit were colluding to keep the index information hidden. This would have been done to block exchange trading, resulting in lower customers' profits from their handling of client transactions.

Business fraud and unfair practices can be as costly to companies as any economic loss. An attorney who has a strong background in business and economic tort law may be able to offer valuable assistance to clients who have suffered from a fraudulent business relationship.

Source: Bloomberg, "Markit Group Said to Avoid U.S. Antitrust Claims as EU Proceeds", Keri Geiger, Matthew Leising & Sara Forden, October 06, 2013