More than $1Million in Restitution Now Available to 10 Connecticut Entities through Nationwide Settlement with JP Morgan Chase
Ten Connecticut municipalities, agencies and not-for-profit entities are now eligible for more than a million dollars in restitution through a $92 million settlement reached with JP Morgan Chase & Co. (JPMC) last year, Attorney General George Jepsen announced today.
Information was sent to the 10 entities this week detailing how they can receive restitution through the settlement, which was reached as part of an ongoing nationwide investigation into alleged anticompetitive and fraudulent conduct in the municipal bond derivatives industry.
Issuers including state and municipal government agencies and not-for-profit organizations entrusted taxpayer money to JPMC, and the company violated that trust by steering those funds into rigged or tainted municipal derivatives contracts, said Attorney General Jepsen. While it is up to each, individual entity to decide whether or not they want to participate in the settlement, I believe that the settlement is appropriate and will compensate these entities for the losses arising from this financial institutions wrongful conduct.
The Connecticut entities eligible to participate in the settlement and receive restitution totaling $1,035,233.12 are:
Quinnipiac University eligible for $280,669.12
Fairfield University eligible for $243,371.96
The Corporation for Independent Living eligible for $213,424.99
The South Central Connecticut Regional Water Authority eligible for $128,341.50
The Town of Stratford eligible for $100,426.14
Yale University eligible for $19,918.50
The Town of Fairfield eligible for $15,858.61
The City of Bridgeport eligible for $14,166.03
The Connecticut Housing Finance Authority eligible for $9,850.88
The Westminster School eligible for $9,205.41
Connecticut led the multistate investigation with Illinois, New York and Texas for the working group of 24 states and the District of Columbia. As part of the July 2011 settlement, JPMC agreed to pay $65.5 million in restitution to affected state agencies, municipalities, school districts and not-for-profit organizations that entered into municipal derivative contracts with the company between 2001 and 2005.
Municipal bond derivatives are contracts that tax-exempt issuers use to reinvest proceeds of bond sales until the funds are needed or to hedge interest-rate risk. In April 2008, the states began investigating allegations that certain large financial institutions including national banks and insurance companies and certain brokers and swap advisors engaged in various schemes to rig bids and commit other deceptive, unfair and fraudulent conduct in the municipal bond derivatives market.
The investigation revealed collusive and deceptive conduct involving certain individuals at JMPC and other financial institutions and certain brokers with whom they had working relationships. The wrongful conduct took the form of bid-rigging, submission of noncompetitive courtesy bids and submission of fraudulent certifications of compliance to government agencies, among others, in contravention of U.S. Treasury regulations.
The objective was to enrich the financial institution and/or the broker at the expense of the issuer and ultimately taxpayers by depriving the issuer of a competitive, transparent marketplace. As a result, state, city, local and not-for-profit entities entered into municipal derivatives contracts on less advantageous terms than they would have otherwise.
To date, the working group has obtained settlements totaling nearly $350 million from companies including JPMC, Bank of America, UBS AG, Wachovia Bank N.A. and GE Funding Capital Market Services, Inc. The investigation remains ongoing.
Attorney General Jepsen co-chairs the Antitrust Committee for the National Association of Attorneys General.
Assistant Attorney General Christopher Haddad and Paralegal Lori Measer, with Assistant Attorney General Michael E. Cole, chief of the Antitrust Department, are assisting the Attorney General with this matter.
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