BofA pays up to clear municipal bond sales row
By Joe Rauch and Diane Bartz |
December 9, 2010, Thursday
|
Print Edition
Print Edition
BANK of America Corp will pay US$137 million to settle a municipal bond bid-rigging probe which is likely to result in more cases being filed in the coming weeks and months.
The investigation centers on whether large US banks decided in advance which investment house would win the auctions of guaranteed investment contracts that cities and counties buy with the proceeds from municipal bond sales.
Often, there is a delay between when bonds are floated and when the money is paid out, allowing some time to invest it.
Christine Varney, head of the US Justice Department's antitrust division, said on a conference call with reporters that she expects "a lot more activity in the coming weeks and months" on a sprawling industry probe that dates to 2007.
She declined to say who else might be a subject of the Justice Department's probe.
Bank of America, the largest US bank by assets, was first to report the bid-rigging problems within its Banc of America Securities unit to the Justice Department, before federal law enforcement began an industry-wide investigation.
BofA was granted amnesty from any penalties because it reported the violations to regulators and cooperated with the investigation.
"Bank of America is pleased to put this matter behind it, and has already voluntarily undertaken numerous remediation efforts," a BofA spokesman said in a prepared statement.
BofA will pay US$36 million in disgorgement and interest to the US Securities and Exchange Commission, while US$101 million will go to other agencies.
Other banks have not helped the Justice Department's investigation, Varney said.
Eight people employed at other financial services companies - including JPMorgan Chase & Co and UBS - have been charged with crimes related to bid-rigging.
Three of the people who have pleaded guilty worked for CDR Financial Products, also known as Rubin/Chambers, Dunhill Insurance Services Inc.
The investigation centers on whether large US banks decided in advance which investment house would win the auctions of guaranteed investment contracts that cities and counties buy with the proceeds from municipal bond sales.
Often, there is a delay between when bonds are floated and when the money is paid out, allowing some time to invest it.
Christine Varney, head of the US Justice Department's antitrust division, said on a conference call with reporters that she expects "a lot more activity in the coming weeks and months" on a sprawling industry probe that dates to 2007.
She declined to say who else might be a subject of the Justice Department's probe.
Bank of America, the largest US bank by assets, was first to report the bid-rigging problems within its Banc of America Securities unit to the Justice Department, before federal law enforcement began an industry-wide investigation.
BofA was granted amnesty from any penalties because it reported the violations to regulators and cooperated with the investigation.
"Bank of America is pleased to put this matter behind it, and has already voluntarily undertaken numerous remediation efforts," a BofA spokesman said in a prepared statement.
BofA will pay US$36 million in disgorgement and interest to the US Securities and Exchange Commission, while US$101 million will go to other agencies.
Other banks have not helped the Justice Department's investigation, Varney said.
Eight people employed at other financial services companies - including JPMorgan Chase & Co and UBS - have been charged with crimes related to bid-rigging.
Three of the people who have pleaded guilty worked for CDR Financial Products, also known as Rubin/Chambers, Dunhill Insurance Services Inc.
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