U.S. regulators are examining whether banks colluded in setting prices in the derivatives market where investors speculate on credit risk, Bloomberg News reported on Friday. The U.S. Securities and Exchange Commission is probing whether firms acted in unison to distort prices in the $6 trillion market for credit-default swaps indexes. The regulator is trying to determine if dealers have misrepresented index prices. The credit-default swaps benchmarks allow investors to make bets on the likelihood of default by companies, countries or securities backed by mortgages. The probe comes after successful cases brought against Wall Street’s illegal practices tied to interest rates and foreign currencies. Those cases showed traders misrepresented prices and coordinated their positions to push valuations in their favor, often through chat rooms — practices that violate antitrust laws.
