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VIX Manipulation Class Actions

Part II: Venue and Consolidation
11 May 2018 Legal News: Securities Enforcement & Litigation

In our previous update, we informed you that Atlantic Trading USA LLC had filed the first class action complaint in Chicago federal court against various numerous unnamed market maker trading firms, alleging manipulation of the Chicago Board Options Volatility Index (VIX). Since then, a total of 18 similar class actions have been filed—12 in Chicago federal court and 6 in New York federal court. The complaints, which are listed below with links, allege that the market makers and/or various CBOE entities systematically manipulated the VIX settlement price.

Class Actions Filed in Chicago Federal Court and Assigned to Judge Manish S. Shah

  1. Atlantic Trading USA, LLC v. Does 1-100, 18-cv-1754 Complaint
  2. Jeffery Tomasulo v. CBOE, John Does, et al., 18-cv-2025 Complaint
  3. Spencer Roland Bueno v. CBOE, John Does, et al., 18-cv-2435 Complaint
  4. Amy Huang v. CBOE, John Does 1-50, et al., 18-cv-2460 Complaint
  5. Nathan L. Terwilliger v. CBOE, et al., 18-cv-3074 Complaint
  6. Robert Etten v. CBOE, John Does, et al., 18-cv-3069 Complaint
  7. William Siegel v. CBOE, John Does 1-50, et al., 18-cv-3021 Complaint
  8. Haldeman Realty Co. v. CBOE, John Does, et al., 18-cv-2915 Complaint
  9. John Pels v. CBOE, John Does 1-10, et al., 18-cv-2757 Complaint
  10. Alex Palatiello v. CBOE, et al., 18-cv-2490 Complaint
  11. Gary M. Beck v. CBOE, John Does, et al., 18-cv-2304 Complaint
  12. Susan Koza v. CBOE, John Does, et al., 18-cv-2185 Complaint

Class Actions Filed in New York Federal Court and Assigned to Judge Analisa Torres

  1. Eric J. Levy, Living Trust UA v. John Does, 18-cv-2552 Complaint
  2. David Samuel v. John Does, 18-cv-1593 Complaint
  3. David Quint v. DRW Holdings, LLC and John Does, 18-cv-1980 Complaint
  4. Christopher Musso v. John Does, 18-cv-2269 Complaint
  5. Thomas J. Sanduski v. John Does, 18-cv-3715 Complaint
  6. Brian Barry v. John Does, 18-cv-2615 Complaint

On May 31, 2018, the United States Judicial Panel on Multidistrict Litigation will hold a hearing in Chicago to consider whether the pending class actions should be consolidated, and if consolidated, where they should be litigated—in Chicago or New York federal court.

Four of the New York plaintiffs have filed motions arguing that the consolidated class action should be venued in New York federal court. Eight of the Chicago plaintiffs, however, support consolidation in Chicago federal court. The Chicago plaintiffs appear to have the stronger argument because the alleged manipulation occurred on two exchanges located in Chicago, the evidence is primarily centralized in Chicago, and a majority of the defendants are based in Chicago. CBOE has filed a motion in support of consolidation, but has not taken a position on venue, stating that either Chicago or New York would be an appropriate venue for the consolidated cases.

Steve Bedell, Katie Trkla, Tom Krebs, and Ellen Wheeler have represented numerous clients in VIX-related regulatory proceedings and have defended regulators’ allegations of VIX manipulation arising from SPX order activity in the HOSS on VIX settlement day − an issue central to these lawsuits. For more information about our team and our experience in this area, please contact us, or visit our Practice page.