The Supreme Court has refused to consider a challenge by Pacific Investment Management Co. (Pimco) to a class action lawsuit that alleges the firm manipulated a futures market for certain Treasury notes.
The WSJ reports that in a suit for more than $600 million in damages, Pimco is alleged to have cornered the market for certain futures contracts on 10-year Treasury notes in 2005, artificially raising prices.
Pimco, which is a subsidiary of Allianz SE, sought to challenge the certification of the class action by a Chicago trial judge, on the argument that some of the 1,000 members of the plaintiff class who bought the futures contracts actually profited from the market manipulation.
In the underlying case, the WSJ reports, plaintiffs allege that Pimco purchased a large long position on the June 2005 contracts, while also buying up to 42% of the deliverable supply of notes. This forced traders with short positions to pay monopoly prices when closing out their obligations, plaintiffs allege, and brought the firm more than $1 billion in trading profits.