Four of the world's largest investment banks have been ordered to stand trial, starting January 22 in Milan, for stock market manipulation during the collapse of Parmalat in 2003.
A judge said Citigroup, Morgan Stanley, UBS and Deutsche Bank knew Parmalat was bankrupt but continued to offer bond issues, rather than telling the market, in order to make fees from the dying company, The Business magazine reports.
However, JP Morgan, Bank of America, Banco Santander and ABN Amro, which were also among banks providing financial services to Parmalat, have not been charged. Enrico Biondi, the current head of Parmalat, said the four banks knew of Parmalat's problems but continued to offer to raise more debt for the company.
The banks deny the charges. UBS said its conduct had been ‘proper’, while Morgan Stanley would ‘vigorously contest’ the charges, Citigroup said the trial would show it was a victim and Deutsche Bank denied any wrongdoing.
Further reading:
Grant Thornton faces ₤5bn claim from Parmalat
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