JPMorgan Chase & Co [corporate website] agreed to a $228 million settlement [press release] with the US Department of Justice (DOJ) [official website] over charges that it used fraudulent bidding practices for state and local government investment securities at taxpayers' expense. As part of the nonprosecution agreement, JPMorgan admits to and takes responsibility for its former employees engaging in anticompetitive practices to rig bidding for municipal securities that involved the investment of proceeds from municipal bonds. JPMorgan agreed to pay [press release] $51.2 million to the affected municipalities, and its affiliates agreed to pay $177 million to settle parallel charges from other federal and state authorities including 25 states' attorneys general, the Securities and Exchange Commission (SEC), the Internal Revenue Service (IRS), the Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board (Fed) [official websites]. The SEC enforcement complaint [text, PDF] alleged that JPMorgan used, "fraudulent practices, misrepresentations, and omissions affected the prices of the reinvestment instruments, deprived the municipalities of a conclusive presumption that their reinvestment instruments were purchased at fair market value, and/or jeopardized the tax-exempt status of the underlying securities, thereby injuring numerous Municipalities."
The investigation into the municipal bond investment market also led to a $160 million settlement [press release] with UBS AG in May and a similar settlement with Bank of America [corporate websites] last December. Last month, JPMorgan reached a $153.6 million settlement [JURIST report] for fraud charges brought by the SEC for allegedly misleading investors during the housing crisis. JPMorgan agreed to pay a $133 million fine, in addition to $20.6 million for fraudulent profits and interest. The settlement was one of the most significant lawsuits against Wall Street for its role in the mortgage crisis.