| Subject: | BofA Agrees to $137 Million Settlement in Municipal Bond Investigation |
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December 07, 2010
BofA Agrees to $137 Million Settlement in Municipal Bond Investigation
Bank of America has agreed to pay $137.3 million to resolve allegations of bid rigging in the municipal bond industry, U.S. Justice Department officials said today.
The bank today entered a global agreement with 20 states and four federal agencies, including the Securities and Exchange Commission. DOJ officials said Bank of America employees conspired to rig bids in connection to the marketing and sale of tax-exempt municipal bond derivative contracts. SEC documents are here.
Assistant Attorney General Christine Varney, who heads the department's Antitrust Division, said Bank of America was the first and only entity to report illegal conduct to the Justice Department. Varney said the bank is cooperating in the department's ongoing investigation.
Varney did not disclose how many employees cooperated and which employees came forward. The illegal conduct happened between 1997 and 2004, Varney said. She said she is "severely restrained" in talking about the probe, including whether any other banks are cooperating.
In a conference call with reporters this afternoon, Varney called the agreement "unprecedented" and said $137 million is a "significant and appropriate settlement." The amount that municipalities lost is "something we are looking very closely at," she said.
"Stay tuned to this channel," Varney said. "I think you will see a lot more activity in the coming weeks and months. We are committed to getting full restitution to all of the municipalities that were victims of this scheme."
Under the Justice Department's leniency program, the bank will not be prosecuted for the conduct as long as there is continued cooperation, Varney said.
An attorney for Banc of America Securities, King & Spalding partner Russell Ryan, who practices in the firm's special matters and government investigations group, was not immediately reached for comment this afternoon.
