Treasurer Torsella Named To Represent Class in Alleged Bond Manipulation Scheme

Federal court expresses confidence in ability of Treasury to lead the class litigation


Harrisburg, PA - Pennsylvania Treasurer Joe Torsella has been appointed as lead plaintiff by Judge Jed S. Rakoff of the Federal District Court for the Southern District of New York in a proposed antitrust class action against 16 financial institutions that allegedly conspired to fix the prices of bonds issued by the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”). Treasurer Torsella initiated the class action in February of 2019 on behalf of all Commonwealth funds under his custodial care.


In identifying Pennsylvania Treasury’s leadership role and selecting Treasury’s outside lawfirm as the lead counsel, Judge Rakoff expressed confidence in the ability of the State Treasurer to “maintain an active role in [the] proceedings.” Noting the testimony of Treasury’s Chief Counsel, Christopher Craig, at the Court hearing, Judge Radkoff was persuaded that Treasury will informatively and independently guide the litigation on behalf of the class.


“I am pleased that the federal court expressed confidence in Pennsylvania Treasury’s ability to represent and lead the entire class in this litigation. Highly rated government-sponsored debt, such as Fannie Mae and Freddie Mac securities, are found in most public institutional investment portfolios. As such, Wall Street Banks must be held accountable when they take advantage of investors by market manipulation.”


Pennsylvania Treasurer, Joe Torsella

Pennsylvania Treasury is represented by interim class counsel Lowey Dannenberg and Scott + Scott.


The suit alleges that the defendant financial institutions—the largest underwriters of Fannie Mae and Freddie Mac bonds—violated federal antitrust law when they exploited their dominant market position and conspired to unlawfully increase prices, overcharging and/or underpaying investors in Fannie Mae and Freddie Mac bond transactions between 2009 and 2014.


The State Treasurer is legal custodian of all Commonwealth funds, which exceed $110 billion.


The Commonwealth entered hundreds of transactions in Fannie Mae and Freddie Mac bonds directly with several of the named defendants while the alleged price-fixing conspiracy was in effect. Federal government sponsored securities, such as Fannie Mae and Freddie Mac bonds serve as foundational investments for public agencies seeking highly rated investments in which to place public funds.

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