By Jonathan Stempel
NEW YORK, Aug 17 (Reuters) - Deutsche Bank AG DBKGn.DE and Bank of America Corp (NYSE:BAC) BAC.N agreed to pay a combined $65.5 million to settle investor litigation accusing large banks of rigging the roughly $9 trillion government agency bond market over a decade.
Preliminary settlements totaling $48.5 million for Deutsche Bank and $17 million for Bank of America were filed on Thursday with the U.S. District Court in Manhattan, and require a judge's approval. Both banks denied wrongdoing.
The settlements were the first in litigation accusing 10 banks of engaging in a "brazen conspiracy" to rig the market for U.S. dollar-denominated supranational, sub-sovereign and agency (SSA) bonds, court papers show.
Deutsche Bank spokeswoman Oksana Poltavets and Bank of America spokesman Lawrence Grayson declined to comment.
The investors are led by the Iron Workers Pension Plan of Western Pennsylvania, KBC Asset Management NV, and the Sheet Metal Workers Pension Plan of Northern California.
They accused banks of communicating by phone, chatrooms and instant messaging to share pricing data and function as a collective "super-desk," while letting traders coordinate their strategies, to boost profit.
This collusion allegedly ran from 2005 to 2015, and forced customers to accept unfair prices on bonds they bought and sold, court papers show.
BNP Paribas SA BNPP.PA , Citigroup Inc (NYSE:C) C.N , Credit Agricole SA CAGR.PA , Credit Suisse Group AG CSGN.S , HSBC Holdings Plc HSBA.L , Nomura Holdings Inc 8604.T , Royal Bank of Canada RY.TO and Toronto-Dominion Bank TD.TO were also sued, and all sought dismissals.
U.S. regulators have also examined possible manipulation in the SSA bond market. Manhattan court is home to a slew of private litigation accusing big banks of conspiring to rig various financial markets, interest rate benchmarks and commodities.
Late Wednesday night, another group of investors sued six banks, claiming they rigged the more than $1 trillion stock lending market. SSA and stock loan litigation are being led by securities class action specialists, and the law firm Quinn Emanuel Urquhart & Sullivan is involved in both.
The case is In re: SSA Bonds Antitrust Litigation, U.S. District Court, Southern District of New York, No. 16-03711.