Italy appeals court overturns bank convictions

[JURIST] An Italian appeals court overturned the fraud oversight convictions of several banks on Friday. A lower court ruled that JPMorgan Chase & Co., Deutsche Bank AG, UBS AG and Depfa Bank Plc forced the city of Milan to enter into an interest-rate swap agreement that ended up costing the city millions when the banks sold derivatives on the bonds. The appeals court overturned [Bloomberg report] this conviction. The banks negotiated new interest rates and prices on the derivatives contracts in hopes of lowering the city's borrowing costs. These banks have entered into several agreements with other cities that have also not been successful. In Milan, nine bank employees were originally sentenced to a suspended eight months in jail. These convictions were also overturned.

This is the latest development in a string of JPMorgan settlements [JURIST backgrounder]. A JPMorgan settlement finalized [JURIST report] last month agreed to pay the US government $614 million and improve company mortgage lending practices for claims it approved thousands of unqualified home mortgage loans for government insurance since 2002 and cost the government millions of dollars when the loans defaulted. In November the US Department of Justice finalized [JURIST report] a $13 billion civil settlement with JPMorgan that resolved federal and state claims arising from the bank's risky mortgage practices that helped lead to the 2008 financial crisis. In August the company disclosed [JURIST report] in its quarterly filing with the Securities and Exchange Commission (SEC) [official website] that it is being investigated by both the civil and criminal divisions of the US Attorney's Office for the Eastern District of California (EDC) [official website] over sales of mortgage-backed securities to investors leading up to the sub-prime mortgage crisis.

 

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