Municipal-bond settlement to bring $230,000

Nevada entities expect to receive approximately $230,000 under a settlement announced Thursday between J.P. Morgan Chase & Co. and the Securities and Exchange Commission involving municipal bond auctions.

Michael Saunders, senior deputy attorney general with the Nevada attorney general's office, said Clark County and McCarran International Airport are eligible to participate in the settlement now, but their claims must be verified.

Saunders said the settlement amount Nevada will receive is rather small compared with the total fine J.P. Morgan will pay. But, he said, Nevada's exposure to the transactions was not as great as that of other states.

"We would be happy to get whatever we are entitled to," said Eric Pappa, a Clark County spokesman.

He said the county, which is facing a
$48 million budget shortfall, is waiting for more information before it files a claim.

Chris Jones, a McCarran International Airport spokesman, declined to comment.

J.P. Morgan will pay $228 million to government regulators and states to settle allegations that it rigged transactions involving municipal bond auctions, according to the SEC.

The SEC in a lawsuit alleged the bank had from 1997 to 2005 manipulated the bidding of auctions for municipal securities. The allegations include claims the bank entered secret deals with bidding agents to get illegal "last looks" at rivals' bids.

Banks help municipalities invest the money they raise from bond offerings so that they can earn interest before paying for projects. They compete by submitting to state and local governments the best yield they can offer.

The bid-rigging deprived governments of a true competitive process that would produce the best returns on their investments, Assistant U.S. Attorney General Christine Varney said in a statement.

The SEC alleged the rigging happened on at least 93 transactions in 31 states, including Nevada.

Federal law requires proceeds of municipal bond sales to be invested at fair-market value. Bidding agents usually organize a process in which banks compete on bids for the investment business to ensure a fair-market-value test is met.

"When powerful financial institutions ... conspire with each other to intentionally violate regulations designed to ensure fair investment prices, the integrity of the municipal marketplace becomes corrupted," said Elaine Greenberg, chief of the SEC's municipal securities and public pensions unit.

The settlement is the third authorities have reached with a bank in a continuing investigation into nationwide corruption of the bidding process of auctions for municipal securities.

Last year, Bank of America Corp. agreed to pay $137 million, In May, UBS AG agreed to pay $160.2 million to settle charges related to the inquiry.