Banks feel the heat from Parmalat scandal
Sat January 3, 2004 07:12 AM ET Reuters
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By William Schomberg and Antonella Ciancio
MILAN, Jan 3 (Reuters) - International banks felt the heat from the multi-billion-euro Parmalat (PRFI.MI: Quote, Profile, Research) scandal on Saturday as the U.S. SEC said it was investigating whether they were negligent or reckless by selling the food firm's bonds.
With Parmalat's disgraced founder Calisto Tanzi facing a new round of questioning in a Milan jail, Italian prosecutors were also focusing on the banks amid one of the world's biggest ever corporate crises.
A senior inspector from the U.S. Securities and Exchange Commission was quoted on Saturday as saying that the way Bank of America (BAC.N: Quote, Profile, Research) and other banks sold billions of euros (dollars) worth of Parmalat bonds was being examined. 'We need to understand if they acted in a way that was negligent or reckless or otherwise,' Lawrence West, associate director of enforcement at the SEC, told Italian newspaper Corriere della Sera.
The SEC has launched its own probe into what it has called 'one of the most brazen corporate financial frauds in history.'
Parmalat's crisis exploded just over two weeks ago when a new management team trying to save the food group revealed a four-billion-euro hole in its accounts."