Wells Fargo OKs lawsuit settlement in bid rigging case
Wachovia Bank NA, now Wells Fargo & Co., has agreed to pay $37 million to settle a lawsuit that alleges several banks rigged bidding competitions to win municipal investment, derivative and other business from states and local governments.
Banks help municipalities invest the money they raise from bond offerings to earn interest before paying for projects. The firms compete by submitting to state and local governments the best yield they can offer.
Wells Fargo disclosed the tentative settlement in a quarterly filing with the Securities and Exchange Commission. It was reached with attorneys for the issuers but still must be approved by a federal judge.
Under the settlement, the company would pay the greater of $37 million or 65 percent of restitution of any future settlement with state attorneys general, including Nevada.
The settlement agreement is expected to be filed with U.S. District Court in New York by the end of the month.
The Nevada attorney general's office has been conducting their own investigation of bid-rigging. It was not clear Friday when that probe might end.
"We can confirm that the investigation of Wachovia (now Wells Fargo) is active and ongoing, but we cannot confirm or deny whether we have an ongoing investigation with respect to any other entity at this time," said Jennifer Lopez, a spokeswoman for state Attorney General Catherine Cortez Masto.
The settlement does not resolve other ongoing investigations. The U.S. Department of Justice, Securities and Exchange Commission, banking regulators and state attorneys general are conducting criminal or civil investigations of many of the Wall Street firms and some regional companies, as well as investment advisers, over bid-rigging in the municipal market.
Federal regulators have already reached settlements of criminal and civil charges with other parties in the case. Bank of America Securities LLC, now Bank of America Merrill Lynch, last December agreed to pay about $138 million.
Lopez said Nevada had entered the settlements with Bank of America, which paid $67 million under the multistate agreement for its involvement in a "nationwide scheme to bid-rig and engage in other anti-competitive conduct that defrauded state and local governments."
The settlement provided restitution to governmental and nonprofit entities both within Nevada that entered into municipal bond derivative investments with Bank of America and were injured by the scheme.
Eligible governmental and nonprofit entities in Nevada received approximately $112,500 of the settlement proceeds.
UBS Financial Services Inc. agreed in May to pay about
$160 million and JP Morgan Chase & Co. announced in July that it would pay $228 million to settle similar charges.
Lopez said there were no Nevada issuers covered under the UBS settlement.
"In regard to JP Morgan settlements there may be some Nevada government entities or nonprofits who are covered but their claims are pending verification," she said.
Contact reporter Chris Sieroty at
csieroty@reviewjournal.com
or 702-477-3893.
