February 24, 2016 / 5:09 PM / 2 years ago

UPDATE 1-UBS, others reach $103 million muni bond rigging settlements

* Banks accused of rigging municipal derivatives prices

* More than $226 million settlements reached overall

* Natixis, Societe Generale settle with U.S. states (Adds Natixis, Societe Generale settlements with U.S. states; adds second byline)

By Jonathan Stempel and Sarah N. Lynch

NEW YORK, Feb 24 (Reuters) - UBS AG and five other banks and brokerages agreed to pay roughly $103 million to settle claims that they conspired to rig prices for U.S. municipal securities.

Wednesday’s accords include payments of $100.5 million to investors. Two of the defendants, France’s Natixis SA and Societe Generale, also agreed to pay $2.8 million to resolve related claims by 21 U.S. states and Washington, D.C.

If approved by a federal judge, the private settlements would end nearly eight years of class action litigation, and result in more than $226 million of payouts from 11 defendants, led by $44.6 million from JPMorgan Chase & Co.

Several banks have during that time also agreed to pay more than $740 million, led by JPMorgan’s $228 million, to resolve related probes by the U.S. Department of Justice and state regulators. At least 17 people were convicted or pleaded guilty, the Justice Department has said.

The investor plaintiffs, including the City of Baltimore and the Central Bucks School District in Pennsylvania, accused banks 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 and school districts that sell bonds often invest proceeds they do not need to spend immediately elsewhere, or enter contracts to hedge interest rate risks, 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.

“We will not tolerate this type of misconduct at any level,” said New York Attorney General Eric Schneiderman, who announced the states’ settlement with Natixis and Societe Generale.

Wednesday’s private settlements included $32 million with UBS, $28.45 million with Natixis, $25.41 million with Societe Generale, $9.75 million with Piper Jaffray Cos, $3.5 million with Royal Bank of Scotland Group Plc’s National Westminster Bank, and $1.4 million with George K. Baum & Co, court papers show.

The defendants denied wrongdoing. Their settlements require approval by U.S. District Judge Victor Marrero in Manhattan.

Other defendants that have settled with investors and regulators are Wells Fargo & Co, Bank of America Corp and General Electric Co, UBS has also settled with regulators, and Morgan Stanley with investors.

A lawyer for the investor plaintiffs did not immediately respond to requests for comment.

The case is In re: Municipal Derivatives Antitrust Litigation, U.S. District Court, Southern District of New York, No. 08-02516. (Reporting by Jonathan Stempel in New York and Sarah N. Lynch in Washington, D.C.; Editing by Jonathan Oatis and Tom Brown)

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