HARRISBURG, Pa. (Legal Newsline) -- Pennsylvania Attorney General Kathleen Kane says distribution is "underway" for more than $8.6 million in restitution to state municipalities and nonprofits that were victimized as part of a large-scale bid-rigging case involving major financial institutions.
Kane said Tuesday the scheme involved the marketing and sale of municipal derivative investments, which are often used by government agencies and nonprofits to reinvest the proceeds of tax-exempt bonds until those funds are needed.
A number of banks, brokers and financial service firms manipulated the bidding process and shared information -- causing victims to pay higher fees and receive lower interest rates.
The newly-elected Kane said the scheme took advantage of state agencies, local governments, public school districts and nonprofits that were attempting to invest or protect the proceeds of tax-exempt bonds.
Multi-state settlements have been reached over the past year with five major institutions: Bank of America ($67 million), JPMorgan Chase ($92 million), Wachovia ($58.75 million), Union Bank of Switzerland ($90.8 million) and GE Funding Capital Market Services ($34.25 million).
Kane said the settlement funds will compensate Pennsylvania victims for their losses, returning the funds they should have received when they initially made their investments.
According to the Attorney General's Office, the JPMorgan Chase settlement, in particular, resulted in numerous six-figure or seven-figure payments to state institutions, including nearly $1.9 million for the Pennsylvania Intergovernmental Cooperation Authority, in Philadelphia; $1.4 million for the Bethlehem Area School District; $435,197 for the Philadelphia Gas Works; $631,471 for the Geisinger Health System Foundation, in Danville, Montour County; $230,937 for the Harrisburg Authority; and $197,636 for the North Penn Water Authority, in Lansdale, Montgomery County.
Other payments range in size from $1,300 to more than $100,000, Kane said.
The multi-state settlements are part of a coordinated national investigation involving state attorneys general and numerous federal agencies, including the Securities and Exchange Commission, the IRS and the U.S. Department of Justice.
From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.
Pa. AG: $8.6M distributed to municipalities, nonprofits as part of bid-rigging settlement
