JEFFERSON CITY, Mo. (CN) - Bank of America will pay $67 million in a multistate settlement to resolve claims of bid-rigging and other anticompetitive conduct in municipal bond derivatives. The settlement is part of a $137 million settlement BofA agreed to with several federal agencies.
Bank of America and other financial institutions and brokers were accused of rigging bids, receiving and providing "last looks" on bids and submitting non-competitive "courtesy" bids on investments between 1998 and 2003.
These actions caused state, local and nonprofit entities to enter into contracts at suppressed rates of return or to pay higher rates on interest-rate hedging instruments, Missouri Attorney General Chris Koster said.
Koster said about 50 Missouri entities are eligible to receive more than $2.6 million under the settlement. Illinois Attorney General Lisa Madigan said Illinois entities are eligible for $2 million.
"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 co-conspirators," Koster said in a statement.
"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."
Under the Department of Justice's Corporate Leniency Program, Bank of America was granted conditional leniency based on its acknowledgement of wrongdoing, cooperation and restitution. The Department of Justice has brought criminal actions against seven people and one company and has obtained guilty pleas against eight other people involved in similar schemes.
Aside from Missouri and Illinois, other states involved in the settlement include Alabama, California, Connecticut, Florida, Kansas, Maryland, Massachusetts, Michigan, Montana, Nevada, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina and Texas.Follow @@joeharris_stl
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