Bank of America Settles Muni Fraud Charges

Bank of America will pay $137 million after it cooperated in a probe.
By Dan Freed ,

NEW YORK (

TheStreet

) --

Bank of America

(BAC) - Get Report

will pay $137 million to settle charges of bid rigging in the municipal bond market, the

Securities and Exchange Commission

announced Tuesday.

The SEC, which brought the charges along with the U.S. Department of Justice, the Federal Bureau of Investigation and 20 state attorneys general, stated agents steered municipalities to Bank of America when it came to invest the proceeds of their bond offerings. Bank of America, in turn, rewarded the agents with increased business, according to the charges.

Bank of America, which said in a press release Tuesday it has been cooperating with regulators' investigation since 2007 in exchange for amnesty, neither admitted nor denied wrongdoing.

In addition to the SEC investigation, the

Financial Industry Regulatory Authority

has been conducting sweeps of the municipal securities business, for example, looking at firms' procedures for disclosing material facts about bonds to investors. There have also been recent lawsuits in municipal securities, such as a class action case accusing more than 30 defendants, including

General Electric

(GE) - Get Report

,

AIG

(AIG) - Get Report

and several large and regional banks, of anticompetitive behavior.

Morgan Stanley recently settled that case for $4.95 million, in what an attorney representing the plaintiffs says is likely to be the first of many such deals.

Municipal bond underwriting activity is dominated by Bank of America,

Citigroup

(C) - Get Report

and

JPMorgan Chase

(JPM) - Get Report

, though Goldman Sachs has lately been trying to gain market share in the business.

--

Written by Dan Freed in New York

.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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