A lawsuit alleging fraud and collusion in the variable rate demand obligation market in Massachusetts can go forward after being amended, a Suffolk County judge ruled Tuesday, another win for the whistleblower known only as Edelweiss Fund LLC.
The ruling represents a second major victory for the anonymous whistleblower who has filed suit in at least four states, and who is expected to be unmasked within the next few days. The accused banks, including JPMorgan Chase & Co., Citigroup Inc., Merrill Lynch & Co., and Morgan Stanley Smith Barney, had argued that the case needed to be tossed because Massachusetts law doesn’t permit a whistleblower to be a corporation.
A motion by the accused banks and broker-dealers to dismiss the proceeding in Illinois was
But the court found that the case can be amended and re-refiled, and that is expected to happen as soon as this week. At that time, the identity of Edelweiss will become public.
"We are pleased by today's decision by the court," said David Lieberman of the Whistleblower Law Collaborative, counsel to Edelweiss in Massachusetts. "We look forward to filing the amended complaint and prosecuting the case going forward."
The suits Edelweiss has filed charge some of the nation’s largest dealer firms with using a “Robo Resetting” device to fraudulently impose artificially high interest rates on the VRDOs so they would not have to be remarketed, allegedly costing the taxpayers. In addition to Massachusetts and Illinois, suits have also been unsealed in California and New York.
