JPMorgan Chase and Barclays Plc have both agreed to make settlement payments to resolve allegations of their participation in a rigging scam involving the Mexican government bond market. Both companies will be paying a combined $20.7 million to settle a proposed class-action lawsuit against them and seven other banks.

The settlement was filed on Monday evening at the US District Court in Manhattan. Lawyers representing the investors accusing the companies stated that the settlement could become the catalysts that will lead other banks to negotiate.

Apart from JPMorgan and Barclays, the other banks that have been accused of conspiring to rig the Mexican bond market include Banco Santander Mexico, BBVA Bancomer, Citi Banamex, Bank of America Mexico, HSBC, UBS, and Deutsche Bank Mexico.

Under the settlement, Barclays had agreed to pay a total of $5.7 million, while JPMorgan agreed to pay $15 million to settle the case. Both banks still denied any wrongdoing and stated that the settlement is not an admission of guilt on their part.

The settlement is still subject to approval by the US District Judge Paul Oetken. In September last year, the US judge dismissed a proposed class-action lawsuit against the banks. However, he did allow investors to amend their complaint.  

The nine banks are being accused by a number of investors, led by mostly pension funds, of forming a "cartel" to rig the Mexican government bond market from 2006 to 2017. The investors alleged that the banks had knowingly shared prices and other market data with each other through various mediums, such as email and chat rooms, in an attempt to maximize profits at the fund's expense.

The allegations of the possible collusion eventually led to the launch of an investigation by Mexico's Federal Economic Competition Commission (COFECE). The probe eventually led to threats of legal action against the nine banks. A report from Moody's pointed out that the credit rating of the accused banks could be at great risk if the Mexican antitrust watchdog were to find them guilty of collusion.

COFECE previously stated that the investigation in the banks' market activities was the largest it has ever launched involving public debt sales. The move was made as part of the country's wider efforts to increase market oversight.  

Apart from JPMorgan and Barclays, Santander had released a statement in response to the accusations, mentioning that it intended to fully cooperate with authorities during their investigation. The other banks have declined to comment.