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JPMorgan muni bid-rigging settlement wins court OK
June 5, 2012 / 2:41 PM / 6 years ago

JPMorgan muni bid-rigging settlement wins court OK

* JPMorgan to pay up to $44.6 mln to settle litigation

* Bank said to conspire to fix prices, rig bids

* Largest US bank settled federal, state probes last July

By Jonathan Stempel

June 5 (Reuters) - JPMorgan Chase & Co received court permission to pay as much as $44.6 million to resolve private litigation accusing the largest U.S. bank of conspiring to fix prices and rig bids on municipal bond transactions.

U.S. District Judge Victor Marrero in Manhattan granted preliminary approval of the accord on Monday night, calling it fair, reasonable and adequate.

Marrero also conditionally certified a class of plaintiffs involved in transactions from 1992 through August 2011. He scheduled a hearing to consider final approval for Dec. 14.

JPMorgan spokeswoman Jennifer Zuccarelli declined to comment.

The settlement follows JPMorgan’s agreement last July to pay $211.2 million to settle charges by federal and state authorities that it had cheated government entities in 31 U.S. states on 93 transactions.

That accord was part of long-running criminal and civil investigations into whether banks and brokers conspired to overcharge state and local governments on investments. Bank of America Corp and UBS AG previously reached respective $137 million and $160.2 million settlements of those probes.

When municipalities sell bonds, they typically invest proceeds that they do not need to spend immediately in a variety of investment vehicles. They usually hire brokers to seek out competitive bids, a process monitored by the Internal Revenue Service because of the tax-exempt status of municipal bonds.

According to regulators, JPMorgan improperly won some bids after arranging with bidding agents to get a “last look” at its competitors’ bids. In other cases, JPMorgan purposely submitted non-winning bids, including bids to satisfy tax regulations, regulators said.

Under its settlement with the U.S. Justice Department, JPMorgan admitted responsibility for illegal conduct by former employees. In settling with the U.S. Securities and Exchange Commission, the bank did not admit wrongdoing.

Among the plaintiffs in the private litigation are the city of Baltimore and government entities in Mississippi and Bucks County, Pennsylvania.

Morgan Stanley and Wells Fargo & Co have also settled their portions of that litigation, which named more than two dozen defendants.

The case is In re: Municipal Derivatives Antitrust Litigation, U.S. District Court, Southern District of New York, No. 08-02516. (Reporting by Jonathan Stempel in New York; Editing by Lisa Von Ahn)

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