TORONTO - Bank of Montreal, one of Canada's top banks, is suing two U.S.-based brokerages and some of their former officers and shareholders for their part in an intricate fraud carried out by the former head of its commodity derivatives group, court documents showed.
In documents filed with the United States court for the southern district of New York, BMO's (BMO.TO) commodity derivatives group outlines an alleged plot in which former head natural gas options trader David P. Lee and officers from Optionable Inc and MF Global Inc colluded to conceal large losses caused by Lee's trading strategies.
BMO alleges that Lee and at least six defendants from Optionable and MF Global worked together for years to fix price quotes on natural gas options and disguise losses from BMO headquarters.
The collusion allowed Lee to overstate the value of his natural gas positions, create fictitious profits, and conceal losses, the court documents say.
Neither Optionable Inc nor MF Global Inc could be reached for immediate comment.
As a result of the defendants' conduct, BMO has suffered millions of dollars in losses related to its natural gas options trading and in responding to government inquiries concerning the defendants' actions, BMO said.
The bank is seeking damages on five counts and a jury trial on all issues triable. (Reporting by Pav Jordan; editing by Andre Grenon)