(Reuters) – Philadelphia City has filed an antitrust process accusing seven major banks of conspiracy to inflate interest rates for a type of bonds used by cities, cities, and other public entities that potentially cost them billions of dollars.  In a complaint received on Wednesday night, Philadelphia accused Bank of America Corp., Barclays PLC, Citigroup Inc., Goldman Sachs Group Inc., JPMorgan Chase & Co., Royal Bank of Canada, and Wells Fargo & amp; of secretly manipulating prices for tax-exempt bonds called VRDO, or requirements for variable demand.
Philadelphia, which said it issued more than $ 1.6 billion of the bonds, said banks collaborated to collect hundreds of millions of dollars in fees they did not earn, reducing critical funding for public services such as hospitals, power and water supply, schools and transport.
"The alleged suspicion of the defendants potentially resulted in Philadelphia ̵
Philadelphia also said the banks' behavior is subject to a preliminary criminal probe of it The US Department of Justice's anti-trust department, while the US Securities and Exchange Commission has contacted four of the banks. The bond buyer reported the probation probe in September, citing named sources.
Bank of America, Citigroup, Goldman, JPMorgan, RBC and SEC refused to comment on Thursday The other banks and justice department did not respond to the request for comment, the complaint was filed in the US District Court in Manhattan.
VRDOs are long-term bonds that allow issuers to borrow at lower short-term rates because they contain a "put" function.  This allows investors to redeem obl igations early bids to banks, such as the seven sued. The banks then remarked the bonds to other investors and charged issuers for their services.
According to the complaint, the banks secretly agreed personally, by telephone and electronically not to compete with each other for remarketing services from February 2008 to June 2016
Philadelphia said the banks did so to keep prices constant high, making sure investors would not exercise their call options and collect fees "to do nothing".
The city is represented by Daniel Brockett, a partner of Quinn Emanuel Urquhart & Sullivan who has filed several antitrust cases against banks in the Manhattan Court.
The court is home to a wide range of private disputes that accuse banks of conspiracy to target various
The case is Philadelphia against Bank of America Corp et al. US District Court, Southern District of New York, No. 19-01608.