Thursday, March 18, 2010

Banks face Milan fraud charges - Deutsche Bank, JPMorgan Chase, UBS and Hypo Real Estate Holding's Depfa Bank

"" MILAN, Italy -- Deutsche Bank, JPMorgan Chase, UBS and Hypo Real Estate Holding's Depfa Bank unit have been charged with fraud linked to the sale of derivatives to the city of Milan.

Judge Simone Luerti scheduled the trial of the four firms, 11 bankers and two former city officials for May 6, Prosecutor Alfredo Robledo said after a hearing in Milan yesterday. The banks allegedly misled the city over swaps that adjusted interest payments on $2.3 billion of bonds sold in 2005.

Prosecutors across Italy are investigating banks as local and national government agencies face potential losses of 2.5 billion euros on derivatives, lawyers say. The Milan probe may also affect cases as far away as the United States, where securities firms have faced charges for price-fixing and bid-rigging in the sale of derivatives to municipalities, though not for fraud, according to former regulator Christopher "Kit" Taylor.

"This case could have repercussions over here if the trial showed deliberate intent," said Taylor, a former executive director of the Municipal Securities Rulemaking Board, the national regulator of the municipal-bond market. "What happened in Europe was the continuation of a pattern in the US."

JPMorgan is "vigorously" defending its position against the charges, the New York-based firm said in a statement. "The employees involved in the transactions acted with the highest degree of professionalism and entirely appropriately."

UBS and "its exponents are confident that they will be able to demonstrate, in the course of the trial, that no criminal plot was conceived," the Zurich-based bank said in a separate statement.

Source
http://www.nypost.com/p/news/business/banks_face_milan_fraud_charges_I0S6vT78W1NjZ6vYKdsXTJ?sms_ss=ema#ixzz0iZNwfl04