WASHINGTON - GE Funding Capital Market Services has agreed to pay $70 million to settle securities fraud, tax and other charges with the Securities and Exchange Commission and other regulators and law enforcement authorities, stemming from ongoing probes of muni market bid rigging, the SEC said Friday.
The charges arise from a broad-ranging scheme involving bid-rigging that occurred between August 1999 and September 2004, in connection with at least 328 transactions and the reinvestment of proceeds from the sale of more than $24.2 billion of underlying municipal securities, generating millions of dollars in ill-gotten gains, the SEC said.
GE Funding will pay approximately $25 million in restitution to the affected municipalities and conduit borrowers, the SEC said. The firm also entered into agreements with the Department of Justice, the Internal Revenue Service, and a coalition of 25 state attorneys general and will pay them approximately $45.35 million, the SEC said.
The firm did not admit or deny the SEC’s allegations.
As part of its settlement with the DOJ, it admitted, acknowledged and accepted responsibility for anti-competitive conduct by its former traders.
The firm will pay the SEC a $10.5 million penalty, as well as disgorgement of $10.63 million in ill-gotten gains and $3.775 million in prejudgment interest.
“Our in-depth investigations have uncovered pervasive corrupt practices in the municipal securities reinvestment market, and we are requiring financial firms one by one to step up and pay the price for their misconduct,” Robert Khuzami, director of the SEC’s division of enforcement, said in a statement.
