Pennsylvania is distributing $8.6 million in restitution from JPMorgan Chase & Co., to municipalities and nonprofit organizations who were victims of a scheme to rig bids of municipal bond reinvestment contracts, the office of Pennsylvania Attorney General Kathleen Kane announced this week.
The latest disbursement is in addition to $3 million in restitution the state has already collected from financial firms and $8 million Pennsylvania still expects to collect, said James Donahue, the state's acting deputy attorney general for public protection.
The disbursements are the result of settlements that five major financial institutions reached in recent years with multiple state agencies, state attorneys general and federal agencies. The firms were said to have participated in the scheme to rig bids, causing municipal bond issuers to pay higher fees and receive lower interest rates, said the attorney general's release.
The distributions of JPMorgan's restitution will include payments of $1.9 million to the Pennsylvania Intergovernmental Cooperation Authority, $1.4 million to the Bethlehem Area School District, $435,197 to Philadelphia Gas Works, $631,471 to Geisinger Health System Foundation, $230,937 to the Harrisburg Authority and $197,636 to the North Penn Water Authority, according to the release.
Last May, Bank of America paid Pennsylvania restitution of roughly $3.1 million, and the state expects to collect $4.8 million from Wachovia, now Wells Fargo & Co., in the coming weeks, Donahue said.
Pennsylvania is also due roughly $1.2 million in restitution from GE Funding Capital Market Services and $1.9 million from Union Bank of Switzerland, he said.
Also this week, Massachusetts Attorney General Martha Coakley announced that investment broker Tradition (North American) Inc., agree to pay $250,000 to Massachusetts to settle bid-rigging charges.
Tradition is a subsidiary of Swiss firm Compagnie Financière Tradition.
The settlement stemmed from a 2010 Massachusetts lawsuit alleging that investment brokers working with Tradition helped some providers win guaranteed investment contracts by telling them what other providers were bidding.
Among the individuals that worked with Tradition was former consultant Adrian Scott-Jones, a guaranteed investment contract broker who was sentenced to 18 months in prison in January for his role in bid-rigging schemes.
Massachusetts has recovered more than $15.75 million from settlements with Tradition, Bank of America, UBS, JPMorgan, Wachovia, GE and Martin Kanefsky, former chief executive of Kane Capital Strategies Inc., according to the release.
Under the terms of the 2010 and 2011 settlements, Bank of America agreed to pay total restitution to states of $67 million, JPMorgan agreed to pay $92 million, Wachovia agreed to pay $58.75 million, Union Bank of Switzerland agreed to pay $90.8 million and GE Funding Capital Market Services agreed to pay $34.25 million.