AP JPMorgan Chase has signed a global agreement of 228 million on the allegations of fraud. A yet to be determined number of New Jersey municipal bond issuers split 1.3 million in restitution.Municipal issuers bond in New Jersey will receive $ 1.3 million in restitution as part of a multi-State settlement that JPMorgan Chase signed yesterday to resolve a scheme alleged municipal bond 92 million.
The names of organizations and municipalities affected by the alleged fraud was not available, said Leland Moore, a spokesman for the Office of the Attorney General in New Jersey.
"It is an important regulation, not only for government agencies and non profit affected by fraudulent behavior alleged here, but for all residents of New Jersey," said Paula Dow, Attorney General of the State. "The conduct involved case made against bond issuers - and finally in New Jersey taxpayers - and worked against a fair, transparent and competitive market."
The settlement of $ 92 million breaks down as follows: $ 65.5 million will be used as the return to the State, non-profit organizations, municipalities and school districts who have concluded contracts with the company between 2001 and 2005. the company will pay a civil penalty of $ 3.5 million and $ 6 million will go to cover the costs of the investigation of 25 States of settling.
Another $ 17 million will be paid to other Governments and non-profit organizations under a separate agreement with the U.S. Securities and Exchange Commission and the Office of the Comptroller of the currency.
The multi-state agreement is part of a comprehensive settlement of 228 million that JP Morgan Chase signed yesterday. It includes agreements with Antitrust Division of the U.S. Department of Justice, the Internal Revenue Service and the Federal Reserve Board.
In 2008, State authorities began to investigate allegations that large financial institutions, brokers and consultants defrauded swap agencies on the market of derivatives municipal bonds.
When banks buy municipal securities, Governments are usually reinvest the proceeds of the sale until the money is used for the intended purpose. The IRS regulations say that the product should be invested in the fair market value, which is usually determined by a competitive tender process.
A statement of the SEC has provided the following description of the allegations against JPMorgan:
JPMorgan would have used "fraud, false statements and omissions" to undermine the process of tendering and affected the price as reinvested municipalities, leaving a few State, city, municipality and the organizations non profit uncertain whether if they were paid a fair price.
Some of these entities have said that they have been deceived on their investments because that JPMorgan allegedly rigged the bidding process.
Now, organizations that said they lose money on contracts with the Bank will have to wait several weeks to determine if they are entitled to a part of the colony of $ 1.3 million.
The Attorney General must submit a list of what they think are eligible State, municipal and non-profit JPMorgan entities and, according to the agreement, the Bank will have the opportunity to make objections, but the State will determine the final list.
"When powerful financial institutions such as (JP Morgan) conspire with them for intentionally violating regulations to ensure the price fair investment, the integrity of the municipal market is damaged," said Elaine Greenberg, head of municipal securities of SEC. "Instead of playing by the rules, the rules it is played."
Stacy Jones: (973) 392-7969, stacy_jones@starledger.com or @ stacyannj on Twitter
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