In a massive 181-page civil complaint available in this News10.com story, SMUD accuses a number of financial heavyweights of fraud and anti-trust violations involving their handling of municipal derivatives. High-profile trial attorney Joseph W. Cotchett of Burlingame's Cotchett, Pitrie, & McCarthy represents SMUD. The action, SMUD v. Bank of America, et. al., No. 09-CV-3133-WBS-DAD, has been assigned to Judge Shubb and Magistrate Judge Drozd.
The Sacramento Municipal Utility District is accusing some of the biggest names in the financial world with collusion, bid-rigging and other fraudulent activity in a massive lawsuit filed Thursday in Sacramento federal court.
The 181-page complaint names nearly 50 financial institutions and brokers SMUD believes are responsible for predatory conduct in their handling of investment vehicles known as municipal derivatives. SMUD claims illegal actions by the defendants cost SMUD ratepayers money while inflating the profits of the financial institutions.
The lawsuit reads like a textbook with chapters titled "Bid-rigging," "Kickbacks," and "It's nice to have friends."
Among the many defendants named in the complaint are Bank of America, JP Morgan Chase, Wells Fargo, Citibank, AIG, Morgan Stanley and Merrill Lynch.
The Sacramento Bee piece says "SMUD joins six city and county governments in California and others across the country that have already filed similar lawsuits arising out of a federal investigation made public in 2006." The other lawsuits "have been transferred to federal court in the Southern District of New York. A federal judge there has been assigned to oversee pretrial matters. Each case will then be transferred back to the court where the suit was filed. SMUD's case will likely follow a similar path and so would be heard in Sacramento."