(CN) – A General Electric finance division will pay $70 million to resolve allegations of rigging municipal bond markets.
GE Funding Capital Market Services acknowledged illegal, anticompetitive conduct by its former traders, the Department of Justice said in a statement announcing the settlement.
According to the nonprosecution agreement, from 1999 through 2004, GE Funding traders made unlawful agreements to manipulate the bidding process on municipal investment contracts, causing GE Funding to make payments through at least 2006. The contracts were used to invest the proceeds of or manage the risks associated with bonds issued by municipalities and other public entities.
A Justice Department spokeswoman said the “anticompetitive conduct harmed municipalities, as well as taxpayers,” and that the settlement “requires GE Funding to pay penalties, disgorgement and restitution to the victims of its illegal activity.”
GE Funding agreed cooperate with the Justice Department’s Antitrust Division in its investigation into anticompetitive conduct in the municipal bond derivatives industry. The investigation has resulted in criminal charges against 18 former executives of financial services companies and one corporation. Nine of the 18 executives have pleaded guilty.
The SEC, the IRS and 25 state attorneys general also entered into agreements with GE Funding, requiring payment of penalties, disgorgement and restitution.
Uncle Sam agreed not to prosecute GE Funding for manipulating bidding for municipal investments, if GE Funding satisfies its obligations under the agreement.