According to Emergency Manger Kevyn Orr's spokesman Bill Nowling, the U.S. Securities and Exchange Commission investigated a swaps deal made under Kwame Kilpatrick, but chose not to pursue action.
Earlier today, Orr testified in bankruptcy court that he spoke with the SEC about prosecuting UBS and Bank of America Merrill Lynch for the potentially illegal deals, but did not share the outcome.
Spokesman Bill Nowling explained the SEC's decision in an email to the Free Press Friday. He also explained that the SEC said the statute of limitations on the deal had expired.
The city is still trying to remedy the sketchy swaps deal.
The city reached a new settlement on Christmas Eve with the banks to get rid of the swaps with newly borrowed cash from London-based Barclays. The new deal amounted to a $65-million discount off a previous settlement of $230 million.
Today, Orr acknowledged “serious questions” about whether the city owes a dime on the deal, saying the city might have a “potential fraud claim” against the banks.
Still, he said the city decided to settle the swaps debt instead of pursuing a legal challenge, calling the chances of success 50-50.
