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Wednesday, November 04, 2009

JPMorgan, SEC Settle On Jefferson County Derivatives

By Ken Sweet

FOXBusiness

JPMorgan Chase & Co. (JPM) announced a settlement with the Securities and Exchange Commission on Wednesday regarding the bank’s sale of derivatives to Jefferson County, Ala.

The agreement between JPMorgan and SEC requires the bank to pay $75 million and forfeit $647 million in interest-rate swap termination fees to settle the SEC’s probe. The bank admitted no wrongdoing as part of the settlement.

JPMorgan was charged with trying to illegally gain favor with Jackson County officials through an “unlawful payment scheme” as part of Jackson County’s ability to finance $3 billion related to improvement of its sewer system. Two JPMorgan bankers allegedly presented the payment scheme to County officials in order to win business.

Jefferson County has been at the brink of bankruptcy this year since the county was unable to refinance its debt due to frozen credit markets.

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