Top-notch Banks caught in FBI inquiry

As a part of the worldwide crackdown on internet gambling, the Department of Justice have issued summons to at least 16 investment bankers, including HSBC, Dresdner Kleinwort, Credit Suisse and Deutsche Bank demanding them to hand over details of their dealings with online gambling companies outlawed in the U.S.

The probe comes as a move to widen investigation into the ever flourishing online gambling industry.

These firms are believed to have underwritten the initial public offerings (IPO’s) of some of the most popular online gambling sites that operate world over.

Despite uncertainty over the legality of online gaming in the United States, online betting companies like Partygaming, BetonSports and 888 Holdings took to London Stock Exchange for their initial public offerings and top investment bankers like HSBC, Dresdner Kleinwort, Credit Suisse and Deutsche Bank choose to underwrite their issues.

After calls on the British Government to spell out the limits of the US authorities’ reach, UK-listed companies have since withdrawn from their US operations.

Aiming to build cases against individuals and companies who profited from online gaming in the US, the Department of Justice (DoJ) through the Southern District Court of New York in its injunction has demanded from banks, e-mails, telephone records and other documents pertaining to Internet gaming firms such as 888 Holdings and Partygaming.

Internet gaming was effectively banned in September 2006, after President Bush signed legislation outlawing gaming-related financial transactions.

However in their defense, European gambling companies, including 888 Holdings and Partygaming argue that they have been taking business from the United States for many years.

Also, until last November U.S. federal law was ambiguous and made no reference to the Internet in its laws.

Meanwhile, Dresdner Kleinwort authorities could not be immediately reached for comment, and officials at HSBC, Deutsche Bank and Credit Suisse declined to comment on the issue.