An Italian judge on Wednesday opened the trial of four banks and 11 bankers charged with fraud involving the sale of derivatives to the city of Milan, a case that spotlights the potential risks of complex financial trades. Prosecutor Alfredo Robledo said the derivatives like the ones sold to Milan pose a danger to the financial health of Italy's local administrations and that the government should intervene.
Prosecutors allege that the city of Milan lost ¤105 million ($128 million) as part of the sale of bonds totalling ¤1.685 billion between 2005 and 2007. On trial are four companies Deutsche Bank, UBS AG, J.P. Morgan and Depfa Bank as well as 11 bankers, a former Milan city manager and a consultant for the restructuring of Milan's debt. In Italy, institutions may be held responsible as well individuals. The banks deny wrongdoing.
On Wednesday, two consumer groups asked to join the trial as civil plaintiffs, a procedure that permits affected parties to claim damages in the case of a guilty verdict. In this case, the damages would go to the city of Milan, said Marco Ponzelli, president of Codacons, one of the consumer groups.
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