BRADENTON, Fla. – Two former JPMorgan bankers facing pay-to-play charges related to bankrupt Jefferson County, Ala.’s bond and swap transactions have rekindled an argument that the swaps are not “securities-based” and therefore are outside the Securities and Exchange Commission’s antifraud authority.

In 2009, the SEC charged that Charles LeCroy and Douglas MacFaddin made $8.2 million in undisclosed payments to close friends of certain county commissioners and broker-dealers to ensure that JPMorgan would be selected as managing underwriter on certain Jefferson County’s bond offerings and that the firm’s affiliated bank would be chosen as swap provider.

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