Oakland files suit against financial firms

April 24, 2008 12:10:42 AM PDT
Oakland City Attorney John Russo, on Wednesday, filed a class-action federal antitrust lawsuit against national financial firms, including Bank of America, Bear Stearns, J.P. Morgan, and Wachovia Bank, accusing them of conspiring to gouge taxpayers through illegal price fixing and bid rigging.

Speaking at a news conference at Oakland City Hall, Russo said the suit alleges that financial companies agreed among themselves to give Oakland and other American cities artificially low bids for guaranteed investment contracts, which cities use to pay bond obligations.

Russo said that without competitive bidding, there is no real free market, and financial companies and brokers were able to give cities abnormally low interest rates, thereby cheating taxpayers out of a reasonable rate of return on their investments.

He said the alleged collusion among competitors is a clear violation of federal and state antitrust laws, which prohibit any agreement by companies to fix prices, rig bids or allocate specific customers.

Russo said Oakland has lost at least $500,000 since 1992 by receiving less interest income than it should have received from its contracts with financial firms.

Russo said the lawsuit is the first of its kind in California, although several similar suits have been filed on the East Coast.

Russo said he wants the suit to be certified as a class action suit and he seeks to recover "hundreds of thousands of dollars" on behalf of cities, counties and school districts across the country whom he said have also been harmed by financial companies.

Russo said the lawsuit was prompted by a federal investigation in which the Department of Justice's antitrust section is looking into allegations that financial firms and brokers colluded with each other when providing bids to municipalities.


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