Goldman Sachs & Co, Citigroup Inc and other high-profile banks must defend against allegations by 15 California cities and counties that they conspired to rig bids for municipal investment contracts and derivatives, a U.S. judge ruled.
But the financial arm of troubled insurance giant American International Group and a unit of General Electric Co were among several companies that won dismissal of civil lawsuits brought in 2008 by the California municipalities, including the city of Los Angeles.
The decisions, which do not address the merits of the case, were published in two separate rulings this week by U.S. District Judge Victor Marrero in New York. Last month, Marrero declined to dismiss similar cases against 16 firms that were sued by several states and Hinds County, Mississippi.
According to court documents, plaintiffs alleged that the more than 40 corporate defendants, including some of the best-known and largest U.S. banks, were involved in a conspiracy of allocating the market for municipal derivatives among themselves.
They accused the banks of rigging the process by which the U.S. public and non-profit entities acquire municipal derivatives, sharing their illegal gains through kickbacks to one another, and making other secret, undisclosed arrangements.
A Goldman Sachs spokesman, Michael DuVally, declined to comment on the rulings. A Citigroup spokesman, Alex Samuelson, also declined to comment.
The antitrust division of the U.S. Department of Justice, which has brought criminal charges of municipals bid-rigging against the founder of CDR Financial Products as well as a current and a former employee, has asked for a limited suspension of discovery in the civil cases. The litigation is likely to continue for several years, according to court filings.
The case is In Re: Municipal Derivatives Antitrust Litigation, U.S. District Court for the Southern District of New York, No. 08-mdl-1950 and No. 08-2516.
(Reporting by Grant McCool; Editing by Richard Chang)