The financial regulators were seeking permission to seize the document of the banks to interrogate the case and prosecute them for the violation of Italian securities laws.
Announcing the verdict in the favor of the banks, a judge at London’s High Court of Justice said that the SFO had an "obvious lack of authority" to obtain documents from JPMorgan Chase, Deutsche Bank, UBS and Depfa Bank.
Italy has accused the aforesaid banks for fraudulent committed by them in hatching a swaps package for a €1.7bn bond issue by the city of Milan in 2005, reports Financial Times.
In March, the four banks settled a separate civil case with the city government and agreed to unwind the swaps, without accepting any wrongdoing.
Consequently, the Milan municipality took back a civil suit against the banks and withdrew as a plaintiff from the criminal case.
In a trial that started two years ago, the banks, almost a dozen bankers and two former city officials are accused of misrepresenting the financial benefits of the derivatives and of a lack of transparency in explaining the terms and conditions.
Milan’s prosecutors asked the UK, in April last year to provide assistance by seizing information from the four banks and in reply the government passed the request to the SFO.
Opposing the SFO attempt to seize the document, the banks argued that Milan’s prosecutors had no legal power for the request as "coercive measures", such as a seizure of documents were not allowed under Italian law.
The SFO said, "We note that in its ruling today, in which the court quashed the decision of the Home Secretary, and therefore quashed the decision of the SFO to continue to act on the request, the court expressed a considerable degree of sympathy for the position of both the Home Secretary and the SFO."
