BRADENTON, Fla. — Florida Attorney General Bill McCollum Wednesday announced a $25 million settlement with JPMorgan to resolve allegations that the investment bank improperly sold unregistered securities to the local government investment pool.

Some $23 million will be distributed to the participants in the former LGIP to reimburse local governmental entities that saw the value of asset-backed investments decline in August 2007. The remaining $2 million will reimburse the costs of the investigation and pay an administrative fine.

Fears of investments linked to downgraded asset-backed securities caused a run on the $27.1 billion pool operated by the State Board of Administration in 2007. After $10 billion was taken out in just two weeks, the SBA froze withdrawals until a plan of action was devised.

Attorneys hired by the SBA to investigate the troubled investments said the state had identifiable claims against JPMorgan, Lehman Brothers and Credit Suisse First Boston as the broker-dealers that sold the agency unregistered securities in transactions that were not exempt from registration. That also was the focus of a Securities and Exchange Commission investigation, which later concluded without any action against the SBA.

It is not clear if the $25 million settlement covers the full value of the investments JPMorgan sold to the SBA.

“We believe the settlement is a fair, reasonable, and responsible result for the participants of the LGIP,” SBA executive director Ash Williams said in a statement.

No one could be reached to determine if settlements are being pursued against the other broker-dealers.

After the run on the LGIP, the SBA placed devalued securities into an account called Fund B. The LGIP was later renamed Florida Prime and received a stable rating of AAAm from Standard & Poor’s.

The JPMorgan settlement enabled the SBA to transfer $23 million from Fund B to Florida PRIME to be distributed to the appropriate investors on Wednesday.

Fund B cash holdings are being distributed as they become available from maturities, sales, investment interest, and other income. Since Fund B was created in December 2007, it has distributed approximately $1.65 billion or about 82% of the original.

Before asset-backed securities posed a problem, Florida’s LGIP was one of the largest in the country. The pool, now known as Florida Prime, is valued at $6.87 billion today.

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