HARRISBURG, Pa. (Legal Newsline) - Pennsylvania Attorney General Kathleen Kane has announced the distribution of more than $1.9 million to Pennsylvania organizations and schools as part of a national bid-rigging settlement involving major financial institutions.
Union Bank of Switzerland allegedly engaged in a scheme connected to the marketing and sale of municipal derivative investments, which are used by government agencies and non-profit groups to reinvest tax-exempt bond proceeds until the funds are needed. Multiple banks, financial service firms and brokers allegedly manipulated the bidding process and shared information, causing victims to receive lower interest rates and pay higher fees.
The scheme allegedly took advantage of non-profit organizations, public school districts, local governments and state agencies trying to invest or protect the proceeds of tax-exempt bonds.
Under the terms of the UBS settlement, multiple Pennsylvania institutions will receive payments to refund them for their losses, including $138,457.75 for Gettysburg College, $145,490.41 for Children's Hospital of Philadelphia, $202,369.86 for Lafayette College, $220,046.88 for Montgomery County and $749,326.66 for Lafayette College. Other payments range from $1,000 to more than $82,000.
Multi-state settlements were also reached in the past year with four other major institutions, including a $34.25 million settlement with GE Funding Capital Market Services, a $58.75 million settlement with Wachovia, a $92 million settlement with JPMorgan Chase and a $67 million settlement with Bank of America. The nationwide settlement with UBS was for a total of $90.8 million.
The settlements are part of a coordinated national effort involving state attorneys general, the U.S. Department of Justice, the Internal Revenue Service, and the Securities and Exchange Commission.