Rome

Audit Court probes Rome council derivatives

Contracts 'date back years'

Audit Court probes Rome council derivatives

Rome, February 20 - Italy's Audit Court said Wednesday it has launched an investigation into the use of derivatives by the City of Rome. As the court officially opened its new judicial year, the probe was announced by Raffaele De Dominicis, the prosecutor for the Regional Audit Court of Lazio, the province centred around Rome. The probe, still in its preliminary stages, involves derivative contracts that were signed several years ago, De Dominicis told a news conference. The announcement comes several weeks after a Milan judge convicted four foreign banks for their role in a derivatives fraud against the city of Milan between 2005 and 2007. Deutsche Bank, JPMorgan Chase & Co., UBS AG, and Depfa Bank Plc., which have denied the charges, were convicted in late December of overseeing fraud by their staff in the sale of derivatives to the city of Milan. The trial involving the four banks began in May 2010, when the banks were accused of defrauding the city government by hiding how much they made on the derivatives. The complex financial instruments have also been in Italian news recently as part of a crisis at Monte dei Paschi di Siena (MPS) bank. Besides poor and possible criminal management, prosecutors are probing loss-making derivatives trades which could cost Italy's third-largest bank some 720 million euros.

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