JPMorgan to pay $211 million to settle bid-rigging charges

JPMorgan to pay $211 million to settle bid-rigging charges

WASHINGTON — JPMorgan Chase & Co. has agreed to pay $211 million after admitting one of its divisions rigged dozens of bidding competitions in ways that cheated state and local governments out of investment returns due them.

Of that amount, $92 million is slated for victims in 31 states, including Colorado, that were underpaid interest on the proceeds from bond offerings.

"We reached the agreement, and now we will go out and find who the victims were," said Mike Saccone, spokesman for Colorado Attorney General John Suthers.

Municipalities and nonprofits that were clients of JPMorgan from 1995 to 2007, when the illegal activity took place, can contact Suthers' office if they believe they should be part of the settlement, Saccone said.

Other financial institutions remain under investigation, Saccone said. Thursday's agreement comes on the heels of a $46 million settlement that attorneys general reached with Bank of America and a $90.8 million settlement with UBS in May.

Banks help municipalities invest the money they raise from bond offerings so they can earn interest before paying for projects. The banks compete by submitting to state and local governments the best yield they can offer.

J.P. Morgan Securities LLC made at least 93 secret deals with companies that handled the bidding processes in 31 states, the Justice Department and the Securities and Exchange Commission said Thursday. Those deals allowed the bank to peek at competitors' offers and bid just enough to win.

In another variation called a "set-up", JPMorgan agreed to underbid on some contracts so it could win others at a lower cost.

The alleged bid-rigging deprived governments of a true competitive process that would produce the best returns on their investments, Assistant Attorney General Christine Varney of Justice's Antitrust Division said in a statement.

JPMorgan's settlement covers complaints brought by the SEC, the Internal Revenue Service, bank regulators and 25 state attorneys general.

Nearly a quarter of the money will go toward settling civil fraud charges brought by the SEC.

JPMorgan agreed to cooperate with the Justice Department's investigation in exchange for not being prosecuted, the agency said.

The company admitted and accepted responsibility for the illegal conduct, which it blamed on former employees of a division that has since been shut down. The company said it "is pleased to have resolved this matter with its regulators" and that the settlement will not affect its financial performance.


source: denverpost.com