Bid-Rigging Alleged In Municipal Bonds

MANHATTAN (CN) - A federal class-action accuses Wachovia Bank and AIG Financial Products Corp. of leading a massive conspiracy to fix prices "and to rig bids and allocate customers and markets for Municipal Derivatives ... sold in the United States and its territories."

A grand jury is investigation the municipal bond industry and "30 large commercial and investment banks, insurance companies and brokers have been subpoenaed and the officers of three brokers have been raided" by the FBI, the complaint states.

Plaintiff Hinds County, Miss., claims, "Defendant Bank of America has been conditionally accepted into the Antitrust Division's amnesty program, in connection with which there was disclosure of information regarding the conspiracy described below and the promise to provide full and complete cooperation to the Antitrust Division and the Class. The inevitable and practical result of this illegal conduct affected the market prices of municipal derivatives."

Lead attorneys for the plaintiffs are Precious Martin Senior of Jackson, Miss., and Sercarz & Riopelle of New York, N.Y.

Here are the defendants: Wachovia Bank NA; AIG Financial Products Corp.; AIG Sunamerica Life Assurance Co.; Bear Stearns & Co. Inc.; Financial Security Assurance Holdings Ltd.; Financial Security Assurance Inc.; Financial Guaranty Insurance Co.; GE Funding Capital Market Services Inc.; Trinity Funding Co. LLC; Genworth Financial Inc.; Natixis SA; JP Morgan Chase & Co.; Lehman Bros. Inc.; Merrill Lynch & Co. Inc.; Morgan Stanley; Nat'l. Westminster Bank PLC; Piper Jaffray & Co.; Societe Generale SA; UBS AG; XL Asset Funding Co. LLC; XL Life Insurance & Annuity Inc.; Nataxis Funding Corp.; Bank of America NA; CDR Financial Products; Feld Winters Financial LLC; Winters & Co. Advisors LLC; First Southwest Co.; George K. Baum & Co.; Kinsell Newcomb & De Dios Inc.; Packerkiss Securities Inc.; Shockley Financial Corp.; Sound Capital Mgmt. Inc.; Cain Bros. & Co. LLC; and Morgan Keegan & Co. Inc.

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