Bank of America settles municipal bid-rigging accusations
Bank of America is paying $137 million to settle government accusations that it paid kickbacks to win business from municipal governments.
Bank of America, the nation’s largest bank, is paying $36 million to the Securities and Exchange Commission, and $101 million to other government authorities, the SEC said in a statement.
The settlement stems from a wide-ranging federal investigation into the mechanisms through which banks won business from municipal clients. The Charlotte, N.C.-based bank cooperated with authorities in exchange for leniency. In settling, the bank neither admitted nor denied the accusations.
The settlement comes a few months after a former Bank of America banker pleaded guilty to taking part in schemes to underpay municipalities for lucrative investments. Employees at a number of other big banks have previously pleaded guilty.
At the center of the bid-rigging probe is a Beverly Hills-based firm, CDR Financial Products Inc., which was indicted by a grand jury last fall.
CDR is accused of taking kickbacks from banks in order to steer municipal investments to the banks. According to the SEC, the kickbacks allowed the banks to pay governments less than they would have otherwise for governement investments.
“The conduct was egregious -– in return for business, the company repeatedly paid undisclosed gratuitous payments and kickbacks and affirmatively misrepresented that the bidding process was proper,” said Robert Khuzami, head of enforcement at the SEC.
-- Nathaniel Popper