The landmark trial of four major banks accused of fraudulently selling derivatives is to begin today in Milan and is expected to take several months to complete.

Switzerland's UBS AG, Germany's Deutsche Bank AG, JPMorgan Chase & Co. in New York and Depfa Bank — the Irish unit of Germany's Hypo Real Estate — are accused of having earned about $128 million in "illicit profits" from irregularities in the sale of derivatives, conducted from 2005 to 2007, that were linked to a $2.2 billion bond issue by the city of Milan. The banks are alleged to have sold complicated derivatives to investors who had little understanding of how they worked, exposing the municipality to enormous risks.

Prosecutors have said that Milan is facing hundreds of million of euros worth of losses from the contracts.

The four banks have repeatedly denied any wrongdoing. Legal sources said that, since this is the first trial of a derivatives case in an Italian court, it is unclear what sort of penalty the banks may face.

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