Banks formed ‘cartel’, made threats against competitors: suit

Pensions representing more than 386,000 public workers across the country sued six banks on Thursday, claiming the Wall Street giants conspired for nearly two decades to inflate prices and stamp out competition in a crucial $1 trillion market.

Goldman Sachs, Morgan Stanley, JP Morgan and others formed a “cartel” in order to keep their dominant positions in the securities lending industry, according to a complaint filed in Manhattan federal court.

The suit, which also names Bank of America, UBS and Credit Suisse, claims the banks make up about 70 percent of the total market.

When competitors threatened to undercut the banks by up to 60 percent, the “cartel” made threats, the suit claims.

“This sounds great, but who’s going to start your car in the morning?” one unnamed banker at a meeting asked a potential rival, according to the complaint.

“This lawsuit is important for institutional investors and pension funds in particular who rely on the income from securities lending to support retirees and other hardworking Americans,” Michael Eisenkraft, a partner at Cohen Milstein, the firm representing the pension funds, told The Post.

Securities lenders let investors borrow or lend out stocks as long as they’re returned after a period of time at an agreed-upon price.

The practice can be lucrative to public pensions, which make up about a third of all securities lenders in the US, according to the suit.

The banks declined to comment.