JPMorgan Chase & Co. is set to pay $211 million to settle allegations that it frequently manipulated a bidding process to win investment business from municipalities.
The bank’s Wall Street division is admitting wrongdoing and paying the money to settle with 25 states and numerous federal regulators including the Securities and Exchange Commission, the Justice Department and the Office of the Comptroller of the Currency, the regulators said Thursday.
The allegations involve the municipal investment market in which cities, states and public agencies invest the proceeds of bond sales before they are used to pay for municipal projects. The regulators said that between 1997 and 2006, JPMorgan employees conspired with competitors to win business from municipalities looking to invest bond proceeds.
In some cases, JPMorgan bankers were allowed to see the bids of competitors, making it possible to win a bid without paying the municipality as much. In other instances, JPMorgan worked with competitors so that they could all pay municipalities lower amounts for investment projects. “School districts, nonprofits and municipalities in this case were all defrauded by Wall Street,” said California Atty. Gen. Kamala Harris, one of 25 state attorneys general involved. “This settlement brings a measure of restitution, justice and closure to the victims.”
A JPMorgan executive pleaded guilty last December to his role in the scheme.
JPMorgan is the third bank to settle such allegations, and it is paying the largest fine. UBS paid $160 million in June and Bank of America Corp. paid $137 million last September.
The money will be divided among the affected municipalities and regulators.
A statement from JPMorgan said the activities were not known to higher executives in the bank and involved a division that was eliminated in 2008.
“JPMorgan Chase does not tolerate anticompetitive activity or other violations of law,” the statement said. “The firm assisted the government agencies in their investigations and is pleased to have resolved this matter with its regulators.”