Nearly 30 Wall Street Bankers Accused in Bid-Rig Conspiracy Suit

Nearly 30 bankers from more than a dozen Wall Street firms, including big names like JP Morgan Chase, UBS and Lehman Brothers, have been named as co-conspirators in an already ongoing criminal antitrust case involving bid rigging and price fixing in the municipal derivatives market. The names of the banks had previously been hidden from the public but were inadvertently included in a court filing on March 24. According to Reuters, the defense later asked Judge Victor Marrero to remove the names from the record, a request that was granted.

The case is linked to a 2006 investigation into how a type of derivative, known as a guaranteed investment contract, is priced. Public entities like local governments and school districts buy these derivatives when they issue municipal bonds to finance projects in order to recoup some of their costs. Federal law requires these contracts to be awarded by competitive bidding to make sure that governments receive a fair return. The government, though, has accused municipal bond broker CDR Financial Products of designating the winners of these bids in advance so as to allow banks to pay below-market interest rates to local governments.

None of the firms or individuals named on the list has been charged with wrongdoing, though the judge did say that they should prepare to defend themselves in court, with a pretrial conference scheduled for April 30. Bank of America, one of the named co-conspirators, has asked to receive lenient treatment from the U.S. government in exchange for providing information for the investigation.