Appeals court acquits banks in Milan derivatives case

Fri Mar 7, 2014 8:12am EST
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By Manuela D'Alessandro

MILAN (Reuters) - A Milan appeals court has acquitted four international banks, including JPMorgan and UBS, found guilty in an earlier trial of mis-selling derivatives to the city of Milan.

Depfa Bank, Deutsche Bank, JPMorgan and UBS had appealed against a landmark verdict from December 2012 ordering the seizure of 89 million euros ($123 million) and fines of 1 million euros for each of the banks.

The original trial was the first of its kind in Italy, where hundreds of local governments entered opaque and risky derivatives deals that turned sour. Many of them have since taken lenders to court to solve their disputes.

The appeals court said on Friday that the four banks had no case to answer. It cancelled the fines and seizure of funds, and also acquitted nine bank employees who had been handed suspended jail sentences of up to eight months.

Milan prosecutor Piero De Petris last month asked for the individual fines and the seizure to be upheld, with only a small reduction for JPMorgan. He also asked for jail sentences of about six months for four of the nine bank employees.

The prosecutor has 90 days to challenge Friday's verdict by filing an appeal with Italy's highest court. De Petris said a decision would take some time.

"One must first read the sentence," he told reporters.

The case relates to a swap contract signed by the city of Milan council when it issued a 1.68 billion euro 30-year bond in 2005. The banks were accused of making 100 million euros in illicit profit and lying about the risks linked to the deal.   Continued...

A sign on the Canary Wharf offices of JP Morgan is seen through the branches of a tree in London January 28, 2014. REUTERS/Simon Newman