July 31, 2019 / 11:52 PM / 18 days ago

Banks reject allegations of collusion on municipal securities rates

Eight major banks have asked a Manhattan federal judge to dismiss a consolidated lawsuit by the cities of Baltimore and Philadelphia accusing them of colluding to manipulate interest rates for a widely used municipal security.

The lawsuit said the banks conspired to fix rates on variable-rate demand obligations (VRDOs), a type of bond with short-term rates, but the banks on Tuesday said the cities’ allegations of a conspiracy “of staggering proportions” involving hundreds of thousands of rates were implausible.

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