Barclays Capital Inc. obtained the dismissal of two complaints alleging Commodity Exchange Act (CEA) violations stemming from Barclays’ role as a market maker in S&P 500 (SPX) options contracts traded on the Chicago Board Options Exchange (Cboe).
Plaintiffs alleged that Barclays and seven other market makers violated the CEA through purported manipulation of Cboe’s Volatility Index (VIX) in connection with the so-called “Volmageddon” surge in market volatility in February 2018. Plaintiffs allegedly held net short positions on options on S&P 500 futures and E-mini futures and claimed to have lost more than $1 billion unwinding those positions in response to the market volatility. The complaints alleged that Barclays and the other defendants caused these losses by submitting false, manipulative quotes for the SPX options, which Cboe used to calculate the VIX.
On September 28, Judge Manish Shah of the U.S. District Court for the Northern District of Illinois dismissed all claims against Barclays in both cases. The court held that the investment adviser failed to plead an injury-in-fact sufficient to establish standing because it had only alleged losses to accounts it managed, not to itself. Judge Shah dismissed the investment trust’s claims on statute of limitations grounds, rejecting its request for the limitations period to be tolled.
The S&C team that represented Barclays included Jeff Scott, Katy McArthur and Gulliver Brady.
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