Kevyn Orr Indicates Big Banks Might Have Defrauded City

January 03, 2014, 10:41 AM

Kevyn Orr

For those who distrust the banks, here's more fodder.

Nathan Bomey of the Detroit Free Press reports that Detroit emergency manager Kevyn Orr testified in U.S. Bankruptcy Court Friday that he had asked the U.S. Securities and Exchange Commission to consider prosecuting two global banks over a disastrous debt deal from 2005 that helped plunge Detroit into bankruptcy.

Bomey wrote:

Orr said this morning that he had conversations with the SEC about filing actions against UBS and Bank of America Merrill Lynch, which collectively provided interest-rate swaps on a $1.4 billion pension debt deal originating in 2005.

He did not say how the SEC responded to his request. The Free Press reported in September that the deal might have been illegal.

Orr said he thought the city might have a potential fraud claim against the bank, but added that the city decided to settle the swaps debt in lieu of a legal battle.  

To read about details of the alleged fraud, go the Free Press story.


Read more:  Detroit Free Press

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