JPMorgan Chase agrees to pay $228 million for fraudulent bidding on municipal bonds Law Advisor

July 6th, 2011 by Cooper Speckman

JPMorgan Chase agrees to pay $228 million for fraudulent bidding on municipal bonds

JPMorgan Chase Co agreed to a $228 million settlement with the US Department of Justice (DOJ) over charges that it used fraudulent bidding practices for state and local government investment securities at taxpayers’ expense. As part of the nonprosecution agreement, JPMorgan admits to and takes responsibility for its former employees engaging in anticompetitive practices to rig bidding for municipal securities that involved the investment of proceeds from municipal bonds. JPMorgan agreed to pay $51.2 million to the affected municipalities, and its affiliates agreed to pay $177 million to settle parallel charges from other federal and state authorities including 25 states’ attorneys general, the Securities and Exchange Commission (SEC), the Internal Revenue Service (IRS), the Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board (Fed) . The SEC enforcement complaint alleged that JPMorgan used, “fraudulent practices, misrepresentations, and omissions affected the prices of the reinvestment instruments, deprived the municipalities of a conclusive presumption that their reinvestment instruments were purchased at fair market value, and/or jeopardized the tax-exempt status of the underlying securities, thereby injuring numerous Municipalities.”

The investigation into the municipal bond investment market also led to a $160 million settlement with UBS AG in May and a similar settlement with Bank of America last December. Last month, JPMorgan reached a $153.6 million settlement for fraud charges brought by the SEC for allegedly misleading investors during the housing crisis. JPMorgan agreed to pay a $133 million fine, in addition to $20.6 million for fraudulent profits and interest. The settlement was one of the most significant lawsuits against Wall Street for its role in the mortgage crisis.

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