BofA to Pay Nearly $138M to Settle Charges of Rigging Bids


Bank of America (NYSE:BAC) has agreed to pay $137.7 million in restitution to federal and state agencies for its alleged participation in a conspiracy to rig bids in the municipal bond derivatives market.

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The funds are being paid to the IRS and municipalities harmed by BofA’s “anticompetitive conduct” between 1998 and 2003, according to the Justice Department.

The agreement, entered with SEC, IRS, Office of the Comptroller of Currency and 20 state attorneys general, is a condition of the Department of Justice’s Antitrust Corporate Leniency Program, a part of the Financial Fraud Enforcement Task Force, established by President Barack Obama to investigate and prosecute financial crimes.

The financial behemoth will pay $25 million to the IRS, and another $9.2 million, $36.1 million, and $62.5 million to the OCC, SEC, and state attorneys, respectively.

Additionally, it will give $4.5 million to the State Attorneys General for help cover costs related to the investigation.

In a statement, BofA said it was pleased to resolve the issue, noting it has already “voluntarily undertaken numerous remediation efforts.”

The bank was the first and only entity to come forward and report its wrongdoing prior to the launch of the federal agency’s investigation, which remains ongoing and has already resulted in charges against seven executives and one corporate entity. Guilty pleas have been received by eight executives for antitrust and other federal related crimes.

The leniency program allows a corporation to avoid criminal conviction and certain fines if it is the first to report participation in a criminal antitrust violation and if other specified requirements of the program are met.

“Bank of America's disclosure of wrongdoing and cooperation has led to an aggressive, ongoing investigation by the Department of Justice into anticompetitive activity in the municipal bond derivatives industry,” said Christine Varney, assistant attorney general in charge of the Department of Justice's antitrust division. “The bank's participation in the leniency program has also resulted in today's resolution to address the harm caused by its wrongdoing.”

The agreement determined that BofA employees engaged in illegal conduct, including bid rigging and other deceptive practices regarding the marketing and sale of tax-exempt municipal bond derivatives contracts.

However, since BofA voluntarily disclosed its activities, it will not be required to pay further penalties and involved employees that cooperated with the leniency program will not be prosecuted by the antitrust division.

In addition to volunteering its information and complying with the federal program, BofA said it took “appropriate personnel actions and other measures to ensure that these and similar practices would not occur again.”

Both the bank and agencies say BofA continues to cooperate with ongoing parallel investigations involving other companies.

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