Italy's financial police are seizing $102 million worth of assets from Bank of America Corp. and a unit of Dexia SA as part of a probe into an alleged derivatives fraud in the southern region of Apulia.
Police are investigating losses on derivatives linked to the sale of about $1.2 billion worth of bonds sold by the regional government in 2003 and 2004, according to an e-mail Wednesday from the prosecutor's office in Bari.
The banks misled the municipality, which is in the "heel" of Italy, on the economic advantages of the transaction and concealed their fees, the prosecutor said.
The region, also known as Puglia, joins more than 519 Italian municipalities that face about $1.4 billion of derivatives losses, according to data compiled by the Bank of Italy. In Milan, prosecutors in April seized assets from four companies, including JPMorgan Chase & Co. and UBS AG, and asked that they stand trial for alleged fraud. Hearings began this month.
Police also are sequestering a further roughly $42 million that the municipality was supposed to place in a fund managed by the banks on Feb. 6, the prosecutor said. The magistrate also asked that Charlotte-based Bank of America be stopped from doing business with Italian municipalities for two years. A hearing is slated for next month.
A spokesman for Bank of America in London declined to comment. A Rome-based spokeswoman for Dexia's Italian unit, Dexia Crediop SpA, had no immediate comment.
