UBS, others reach $100 million muni bond rigging settlements

Wed Feb 24, 2016 10:31am EST
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* Banks accused of rigging municipal derivatives prices

* More than $226 million settlements reached overall

* JPMorgan, others settled with U.S. Department of Justice

By Jonathan Stempel

NEW YORK, Feb 24 (Reuters) - UBS AG, Natixis SA and four other banks and brokerages agreed to pay just over $100 million to settle investor claims that they conspired to rig prices for municipal securities.

If approved by a federal judge, the settlements disclosed on Wednesday would end seven years of private class action litigation, and result in more than $226 million of payouts from 11 defendants.

The plaintiffs, including the City of Baltimore and the Central Bucks School District in Pennsylvania, accused the defendants of conspiring to fix prices for municipal derivatives, causing them to receive lower interest rates than they would have gotten in a competitive marketplace.

Municipalities that sell bonds typically invest proceeds they do not need to spend immediately elsewhere, and hire banks and brokers to seek out competitive bids.

The defendants were accused of abusing this process through such means as getting advance peeks at their rivals' bids, or purposely submitting non-winning bids.   Continued...