As part of a $137 million national settlement, Bank of America will pay the state $2.6 million in restitution for its role in a scheme to rig bids and defraud organizations in the purchase of municipal bond derivatives.
The company will pay $67 million to state entities defrauded in the scheme, with the rest going toward federal agencies, according to a news release from Attorney General Chris Koster's office.
From 1998 to 2003, Bank of America and other institutions and brokers allegedly engaged in anticompetitive activity, rigging bids, receiving and providing last views on bids and submitting non-competitive courtesy bids on investments.
The schemes enriched financial institutions and brokers while state agencies, towns, cities, school districts and nonprofit entities received contracts at lower rates of return on investments or paid higher interest rates than they should have in a competitive marketplace, the release said.
Approximately 50 Missouri entities fell short to these schemes and are eligible for their portion of the $2.6 million state settlement. Specific organizations to receive restitution were not named.
"This settlement recovers money that municipal bond issuers and not-for-profit organizations would have received but for the alleged bid rigging of Bank of America and its coconspirators,” Koster said in the release. “Bank of America and its co-conspirators engaged in sham bids in which the outcome had been predetermined in order to provide the illusion of competitive bids and fair dealing while enriching financial institutions and brokers at the expense of cities, taxpayers and not-for-profit organizations.”
The company entered into settlement agreements with 20 state attorneys general, the U.S. Securities and Exchange Commission, the IRS and the Office of the Comptroller of Currency, according to a news release from the U.S. Department of Justice.
Bank of America received some leniency, as it voluntarily self-reported its actions to the DOJ.
The DOJ's
Antitrust Corporate Leniency Program stipulates that the company involved must be the first entity to self-report anticompetitive conduct. If it does, it can avoid criminal conviction and fines, and individuals involved can avoid criminal conviction, prison terms and fines.
Since Bank of America was the first to report its actions, it will not face penalties but will be required to pay full restitution to the IRS and entities identified by federal and state agencies, the release said.
Christine Varney, assistant attorney general in charge of the DOJ's Antitrust Division, said the department's leniency program is essential to criminal enforcement of antitrust laws.
"Bank of America’s disclosure of wrongdoing and cooperation has led to an aggressive, ongoing investigation by the Department of Justice into anticompetitive activity in the municipal bond derivatives industry," she said in the release. "The division’s investigation of this matter continues and the prosecution of anticompetitive conduct in the financial markets remains our highest priority."[[In-content Ad]]
