More than a dozen banks and investment firms are suspected co-conspirators in a criminal probe by the Justice Department's antitrust division into alleged bid-rigging and price-fixing in the municipal financing market, according to a court filing.
The list of banks was "inadvertently" filed last week in U.S. District Court in Manhattan as part of defense lawyers' request for specific evidence from the government in a criminal case against three former executives of CDR Financial Products Inc., a California municipal-bond broker.
The executives, including CDR founder David Rubin, were indicted in October on conspiracy and fraud charges. They have denied wrongdoing.
In a letter Thursday, the lawyers asked U.S. District Judge Victor Marrero, who is hearing the criminal case, to strike the inadvertent filing. He granted the request, according to Bloomberg News.
The banks and investment firms include units of JPMorgan Chase & Co., UBS AG, Citigroup Inc., Wells Fargo & Co., Bank of America Corp., General Electric Co., Lehman Brothers Inc. and Societe Generale. None of the alleged co-conspirators has been accused of criminal wrongdoing.
UBS, Citigroup, Societe Generale, JPMorgan Chase and Wells Fargo all declined to comment Friday. Bank of America, Lehman Brothers and GE did not immediately return phone calls seeking comment.
The Justice Department also declined to comment Friday.
The antitrust division has been doing an industrywide probe of alleged manipulation of the municipal financing market since 2006. The Securities and Exchange Commission is doing a separate civil probe.
In 2007, Bank of America agreed to cooperate with the Justice Department probe in exchange for not being subject to criminal charges.
Three CDR employees pleaded guilty this year to criminal charges.
Dozens of banks have been subpoenaed, and several have acknowledged this publicly.
In the CDR criminal case, it and its executives are alleged to have conspired to allocate and rig bids for investment agreements or other municipal finance contracts, according to the indictment.
This allegedly included designating the winning bidder in advance, discussing and agreeing on what the co-conspirators would bid for certain financing contracts and causing losing bids to be submitted with the understanding that losing bidders would be allocated other investment agreements or municipal finance contracts.
In their motion, lawyers for Rubin and the other former CDR executives said prosecutors had indicated at a hearing in December that they planned to prove about "300 discrete municipal bond deals" were tainted by the alleged conspiracy during almost a decade.
The municipal financing deals at issue ran from 1998 to 2005 and included school district general obligation refunding bonds and revenue bonds for airports, hospitals and public housing projects, according to a document given the CDR defense lawyers. The document was filed publicly with the list of suspected co-conspirators.
The banks and investment firms also are subject to lawsuits by local governments and other entities that claim they were forced to pay more for financing and received smaller proceeds as a result of the alleged collusion.