Tuesday, March 23, 2010

Tett: Municipalities in swaps

"...The reason is derivatives. Earlier this week, the City of Milan announced that it is suing Deutsche, UBS, JPMorgan and Dexia, for allegedly misleading the city on swaps that adjusted interest payments on some €1.7bn ($2.3bn) of deals. The allegations, which the banks deny, will start in May.

Meanwhile, on the other side of the Atlantic - if not cultural spectrum - another battle has recently played out in relation to bonds and swaps arranged by JPMorgan for Birmingham county, Alabama. Last year, JPMorgan agreed to pay a $25m civil fine, make a $50m payment to Birmingham and forfeit $647m in termination fees linked to swaps deals. This came after the Securities and Exchange Commission accused JPMorgan of malpractice (a claim that the bank neither admitted nor denied on settlement)..."

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