JPMorgan admits error
NEW YORK – JPMorgan Chase & Co. is set to pay $228 million to settle accusations that it frequently manipulated a bidding process in order 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 Department of Justice and the Office of the Comptroller of the Currency.
The accusations involve the municipal investment market in which cities, counties and states invest the proceeds of bond sales before they are used to pay for municipal projects. The complaints filed by regulators Thursday said between 1997 and 2006 JPMorgan employees secretly conspired with competitors to win business from municipalities looking to invest bond proceeds.
“Municipal issuers and investors didn’t stand a chance against the fraudulent strategies JPMS and others used to guarantee profits,” the SEC’s director of enforcement, Robert Khuzami, said in a statement.
A JPMorgan executive was criminally charged last December for his role in the scheme.
JPMorgan is the third bank to settle similar charges, and it is paying the largest fine. UBS paid $160 million earlier this year and Bank of America paid $137 million last year.
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 desk 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.”