GE Funding Capital Services agrees to $70 million fine

Michael P. Tremoglie Dec. 27, 2011, 10:00am


WASHINGTON (Legal Newsline) - GE Funding Capital Market Services Inc. has agreed to pay $70 million in restitution, penalties and disgorgement to federal and state agencies over its role in anticompetitive activity in the municipal bond investments market.

According to a Friday announcement from the Department of Justice, GE Funding admits to anti-competitive conduct by its former traders from 1999 through 2004.

The non-prosecution agreement states that certain former GE Funding traders entered into unlawful agreements to manipulate the bidding process on municipal investment and related contracts.

These contracts were used to invest the proceeds of, or manage the risks associated with, bond issuances by municipalities and other public entities.

"GE Funding's former traders entered into illegal agreements to manipulate the bidding process on municipal investment contracts," said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Justice Department's Antitrust Division.

GE agreed to pay restitution to victims of the anticompetitive conduct and to cooperate fully with the Justice Department's Antitrust Division in its ongoing investigation into anti-competitive conduct in the municipal bond derivatives industry.

Eighteen former executives of various financial services companies and one corporation have been indicted. Nine have pleaded guilty.

In the multistate portion of the agreement, GE Funding agreed to pay $30 million in restitution to affected government entities, educational institutions and nonprofits nationwide that purchased municipal bond derivatives from the companyand two of its affiliates -- Trinity Funding Company, LLC and Trinity Plus Funding Company, LLC -- between 1999 and 2005.

"GE Funding sought to profit at any cost, even if it meant cheating government entities and educational institutions out of much-needed resources," Illinois Attorney General Lisa Madigan said.

"This settlement will ensure that GE Funding returns its unlawfully-obtained profits to the governments and schools."

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