City sues financial firms over bond pricing, updates opioid lawsuit

0
Share the News


City Solicitor Andre Davis, center, speaks at a press conference on April 4, 2019. Image via Charm TV.

At a press conference this morning, Ex-Officio Mayor Bernard C. “Jack” Young issued a warning to the “bad actors” looking to exploit the city.

“There’s a capable sheriff in town, and his name is Judge Davis.”

That would be Andre Davis, the former federal appellate judge who now serves as Baltimore’s city solicitor.

Davis announced today the city has filed a class action antitrust lawsuit against a host of banks and financial firms, claiming the companies manipulated the price of federally backed debt securities by buying up the bonds and colluding to fix prices on the secondary market.

The bonds are issued by Fannie Mae and Freddie Mac, government-sponsored enterprises that back home mortgages and sell them on the secondary market.

Bank of America, Barclays, Citi, Credit Suisse, Deutsche Bank, First Tennessee Bank, Goldman Sachs, Jefferies Group LLC, JP Morgan, Merrill Lynch, Pierce, Fenner & Smith, Inc. and UBS are all listed as defendants on the suit, and the city said in its complaint they were the biggest purchasers of these bonds from January 2009 to April 2014.

During that time, the city bought 108 of the bonds for nearly $1 billion, the suit says. Now, they’re claiming they were overcharged.

“The manipulation of these prices, we contend, has resulted in an imposition of six-figure costs to the City of Baltimore, and we are determined, with the aide of very expert counsel, to seek redress on behalf of the City of Baltimore,” Davis said at the press conference. “Because we will not stand still and permit these kinds of shenanigans to go on.”

The allegations track with a U.S. Department of Justice investigation, launched last June, into the practice within the $550 billion bond market.

In the 43-page complaint, the city says it reviewed Bloomberg data of more than 140,000 bond transactions and noticed “abnormal” pricing, which they say shows the financial firms agreed to overcharge buyers.

Davis also discussed a lawsuit against pharmaceutical companies that the city filed last year and recently amended to include other defendants, including members of the Sackler family, owners of the company that makes the prescription painkiller OxyContin.

A similar suit against the drug company, Purdue Pharma, and the Sacklers has been brought in Massachusetts. An attorney for the family recently asked for the case to be thrown out, saying it has “misleading and inflammatory allegations,” according to a Reuters report.

The same story said roughly 2,000 cases have been brought against Purdue Pharma, accusing the firm of fueling the opioid epidemic.

At the press conference, Davis said there’s a wealth of reporting that shows drug manufacturers have been “culpably involved” in making these addictive narcotics and encouraging doctors to “excessively prescribe” them.

To date, there have been 250 opioid overdose deaths in Baltimore City, more than all other jurisdictions in Maryland combined, he said.

“Baltimore City, for many years, has had a problem with narcotic addiction, we all know that,” he said. “But the advent of the opioid epidemic that is ravaging the country is having a particularly ravaging effect on the people of Baltimore City and its institutions, and on the city itself.”

The city is working with the law firm Susman Godfrey LLP on both cases.

Brandon Weigel

Brandon Weigel is the managing editor of Baltimore Fishbowl. A graduate of the University of Maryland, he has been published in The Washington Post, The Sun, Baltimore Magazine, Urbanite, The Baltimore Business Journal, b and others. Prior to joining Baltimore Fishbowl, he was an editor at City Paper from 2012 to 2017. He can be reached at [email protected]
Brandon Weigel


Share the News

LEAVE A REPLY

Please enter your comment!
Please enter your name here