WASHINGTON — A former municipal derivatives trading desk manager at Banc of America Securities LLC has pleaded guilty to one criminal count of falsifying bank records in connection with a conspiracy to rig bids and engage in other anticompetitive activities regarding investment agreements and other finance contracts in the muni market.
In an “information” document released Wednesday, the Justice Department, said Brian Scott Zwerner managed the derivatives trading desk at “Bank A” from around July 1998 to October 2002.
Although, the department did not name the bank, a document filed at the Financial Industry Regulatory Authority shows Zwerner worked at Banc of America Securities from May 1999 to April 2005. He currently is employed at FIG Partners LLC in Atlanta, an employee-owned broker-dealer specializing in financial institutions. According to FIG, Zwerner was at Banc of America in London and Chicago from 1998 to 2005.
According to the Justice Department, between January 1999 and May 2002, Zwerner and unidentified co-conspirators falsified bank records relating to marketing profits so that the bank could pay kickbacks to brokers, including Rubin/Chambers, Dunhill Insurance Services Inc., now known as CDR Financial Products Inc. in Beverly Hills.
Zwerner understated the marketing profits on trade tickets for certain investment agreements or other muni finance contracts so that money could be held back and accumulated in an off-the-books account in order to pay kickbacks.
The kickbacks were made in return for CDR and other brokers manipulating the bidding process so that the bank could be the winning provider for certain investment agreements and contracts.
The conspiracy count for which Zwerner is charged carries a maximum penalty of five years in prison and a $250,000 fine.
This is the ninth guilty plea to arise from an ongoing antitrust investigation being conducted by the Justice Department, the Federal Bureau of Investigation and the criminal division of the Internal Revenue Service. The agencies are coordinating their investigation with the Securities and Exchange Commission, the Office of the Comptroller of the Currency and the Federal Reserve Bank of New York.
CDR and its founder, David Rubin and three others associated with the firm were indicted in October 2009. Three former CDR employees have pleaded guilty to bid-rigging and fraud conspiracies in connection with the probe. Five other individuals also have pleaded guilty in the investigation.
A lawyer representing Zwerner declined to comment. The CDR trial is expected begin Jan. 9.
