The San Francisco Redevelopment Agency is suing some of the world’s biggest financial firms, alleging they colluded to siphon returns from tens of millions of dollars worth of investments.
Defendants — including Goldman Sachs, Bank of America, Merrill Lynch and JPMorgan Chase — denied the accusations in court documents.
The Redevelopment Agency invests money raised through bond sales until the cash is needed for projects like job training and construction of buildings, parks and storefront facades.
The projects are designed to help bring affordable housing, jobs, shopping opportunities and community facilities to some of The City’s most economically distressed and newest neighborhoods.
The agency alleged in federal court that the financial firms colluded in bidding processes rather than compete against one another to win The City’s investments.
The affected municipal derivatives investments were made in 1998, 2005 and 2006, according to agency Counsel James Morales.
The agency has yet to determine how much it lost through the alleged bid-rigging, according to Morales.
“If we count up the amount of money in these particular transactions, it’s close to $50 million,” Morales said.
Any damages awarded by a court could be tripled under federal antitrust laws.
Because of the lowered returns offered by the financial firms, money that should have helped improve and grow San Francisco’s neighborhoods was allegedly funneled instead to bankers and co-conspirators.
“It was a very informal old boys’ club, or young men’s club,” said attorney Stuart Gross, an outside counsel representing the agency and scores of other municipalities in the lawsuit.
The San Francisco Redevelopment Agency joined the lawsuit this week that was filed by scores of other municipalities, including redevelopment agencies, the cities of Los Angeles and Stockton, and the counties of San Diego, Contra Costa and San Mateo. Attorneys representing financial firms involved in the case declined to comment or did not respond to inquiries.