Oakland sues big finance firms, alleging price fixing

The City of Oakland filed a federal antitrust suit against a host of major finance firms, including Bank of America, Wachovia and J.P. Morgan Chase, alleging that they fixed prices on guaranteed investment contracts.

Also named in the class action suit are Bear Stearns, AIG Financial Products Corp., Merrill Lynch, Morgan Stanley, Société Générale, UBS and other firms.

In the complaint, filed Wednesday, Oakland "alleges a nationwide conspiracy among Defendants to rig bids, to allocate customers and markets, and to fix, raise, maintain or stabilize the returns received by Oakland" as well as other cities who invested in this type of contract. The suit seeks damages and restitution for Oakland and other members of the class, with the amount to be trebled because of antitrust laws. It also seeks payment of the costs of the suit and legal fees.

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Oakland's city attorney, John Russo, filed the suit. San Francisco law firm Lieff, Cabraser, Heimann & Bernstein is working on the suit at no cost to Oakland, as is Moscone, Emblidge & Quadra, another San Francisco law firm.

Alex Katz, communications director in the City Attorney's office, said the suit was filed after months of preparation by the two law firms. "Every suit that we file we file after very serious consideration. We don't have a reputation for going on fishing expeditions," he said.

Katz said the city now must wait to see if the suit wins class action status from the court. "We hope that will happen," he said. After that, he said, "We are going to battle it out."