Settlement Agreement With First Tennessee Bank Submitted In Alleged Bond Manipulation Case

First Tennessee Bank becomes second financial institution to agree to financial settlement and antitrust compliance reforms


Harrisburg, PA - Pennsylvania Treasurer Joe Torsella announced today that Plaintiffs have entered a settlement agreement with First Tennessee Bank & FTN Financial Securities Corp. (collectively, “FTN”) to resolve claims related to FTN’s alleged involvement in a conspiracy to fix the prices of bonds issued by several government-sponsored entity (“GSE”), including Fannie Mae and Freddie Mac. FTN is now the second financial institution to settle, agreeing to provide $14.5 million in compensation, in addition to developing and implementing important antitrust compliance-remediation measures to detect and prevent future anticompetitive conduct in the GSE bond market.


“Reforming the GSE bond market is critical to restoring investor confidence that prices are free from artificial manipulation. GSE bonds are part of virtually every public investment portfolio in the nation. My focus in this case is to reform the conduct of these big banks. Institutional investors should have confidence that tax dollars are not being unlawfully grabbed by Wall Street. As class representative, I will continue to fight to make sure that policies are in place to prevent this from happening again.”


Pennsylvania Treasurer, Joe Torsella

A central feature of the settlement is FTN‘s agreement to develop and maintain a robust compliance program specifically designed to prevent and detect anticompetitive conduct when it engages in the GSE bond market. This compliance program, to be developed in consultation with Pennsylvania Treasury is to specifically include:

  • rigorous compliance training;
  • established culture of compliance;
  • strong oversight;
  • dedication of corporate resources;
  • and robust risk assessment.

In addition, FTN has agreed to meet and confer with the Pennsylvania Treasury to discuss the bank’s ongoing antitrust compliance policies, procedure, and controls applicable to the GSE bond market.


The suit alleges that the defendant financial institutions—the largest underwriters of GSE bonds—violated federal antitrust law when they exploited their dominant market position and conspired to unlawfully increase prices, overcharging and/or underpaying investors in GSE bond transactions between 2009 and 2016.


The Commonwealth of Pennsylvania entered thousands of transactions in GSE bonds directly with the named defendants while the alleged price-fixing conspiracy was in effect. GSE bonds, such as those issued by Fannie Mae and Freddie Mac, serve as foundational investments for public agencies seeking highly rated investments in which to place public funds.


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

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