Reuters Announces $137 Million Bank Of America Settlement
Reuters announced on Tuesday, December 7, 2010, that Bank of America (BAC) had reached a settlement with state and federal authorities involving claims that it had defrauded buyers of municipal bond derivatives. It admitted bid rigging and other anti competitive practices in marketing and selling municipal bond derivatives. The settlement is the latest in a far reaching, industry wide investigation going back to 2007 in the municipal bond derivatives market. According to the release, Bank of America (BAC) will pay $36 million in disgorgement and interest to the U.S. Securities and Exchange Commission (SEC), with the other $101 million to be distributed among other agencies. The Internal Revenue Service (IRS) will take $25 million and the 20 participating attorneys general will distribute $62.5 million to investors who suffered losses. Finally, $4.5 million will go to cover the expense of the investigation by the attorneys general.
Bank of America was granted amnesty from civil penalties since the bank initially reported the violations to regulators and had cooperated throughout the investigation. Douglas Lee Campbell, a former Bank of America employee, pleaded guilty to two counts of conspiracy and one count of wire fraud for his part in the bid rigging process. He was barred from ever associating with any broker, dealer or investment adviser.
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