JPMorgan, 11 Others Sued Over Jefferson County Crisis

Bloomberg reports:

JPMorgan Chase & Co., Morgan Keegan & Co. and 10 other banks, advisers and insurers were sued by a Jefferson County, Alabama, man who claims their work on county bond transactions saddled residents with soaring sewer bills.

The complaint, filed in Alabama court in Birmingham today by Charles Wilson, also alleges that seven current and former county commissioners breached their fiduciary duty. The suit seeks damages for the 146,000 sewer customers in Jefferson County, the most-populous county in Alabama, as well as the return of fees.

The ``commissioners, various investment banks, insurers and advisers have continuously failed to act in the best interests of the citizens of Jefferson County,'' according to the lawsuit.

Sewer bills for residents of Jefferson County, with a population of 659,000, have risen more than fourfold over the last 11 years as the county amassed $3.2 billion of debt to build a new sewer system. Almost all of the bonds carry adjustable interest rates and are tied to derivatives intended to protect the county from higher borrowing costs, a strategy that backfired this year and pushed the county to the brink of bankruptcy.

We wonder if more lawsuits like this are coming down the pipeline?