A group of California cities and counties can proceed with a lawsuit alleging shenanigans by some of the world's largest financial institutions
, a federal judge ruled today.
In a decision delivered in federal court for the Southern District of New York, Judge Victor Marrero denied a motion to dismiss a lawsuit brought by municipalities including Los Angeles, Sacramento, Contra Costa County, San Mateo County, Stockton, and San Diego County.
The lawsuit -- filed against companies including Goldman Sachs
, Wells Fargo, Citibank, and JPMorgan Chase -- asserts that these banks illegally manipulated the market for derivatives of municipal bonds, which public agencies use to fund capital projects such as roads and schools.
The judge found that the California governments -- alleging a "conspiracy" among financial institutions that involved "rigging the process" by which muni derivatives were sold and "sharing illegal gains through kickbacks" -- appear to have solid enough claims to move forward. Yet more bad news for the barons of high finance.
Photo | Neubie