On Friday Attorney General Kathleen G. Kane announced that more than $1.9 million is being given to Pennsylvania organizations and schools that were victimized as part of a large-scale bid-rigging case involving major financial institutions.
Kane said that Union Bank of Switzerland (UBS) devised a scheme involving the marketing and sale of municipal derivative investments, which are often used by government agencies and non-profit groups to reinvest the proceeds of tax-exempt bonds until those funds are needed.
According to the continuing national investigation, a number of banks, brokers and financial service firms manipulated the bidding process and shared information. That caused victims to pay higher fees and receive lower interest rates.
Kane said the scheme took advantage of state agencies, local governments, public school districts and non-profit organizations that were attempting to invest or protect the proceeds of tax exempt bonds.
Multi-state settlements have been reached over the past year with five major institutions: Bank of America ($67 million), JPMorgan Chase ($92 million), Wachovia ($58.75 million), Union Bank of Switzerland ($90.8 million) and GE Funding Capital Market Services ($34.25 million). The settlement funds will compensate Pennsylvania victims for their losses, returning the funds they should have received when they initially made their investments.
The UBS settlement resulted in numerous five-figure or six-figure payments to Pennsylvania institutions, including: $749,326.66 for Pennsylvania Housing Finance Agency, $220,046.88 for Montgomery County, $202,369.86 for Lafayette College, $145,490.41 for Children’s Hospital of Philadelphia, $138,457.75 for Gettysburg College, $82,855 for Carnegie Mellon University, $77,833.77 for Swarthmore College, nearly $55,000 for the Pennsylvania Turnpike Commission, $42,878.52 for Philadelphia University, $39,497.20 for the Pittsburgh Water and Sewer Authority, nearly $36,000 for the County of Butler, $18,027.28 for LaSalle University, $2,243.11 for Pennsylvania Higher Education Assistance Agency (PHEAA). Other payments range in size from $1,000 to more than $35,000.
Kane said these multi-state settlements are part of a coordinated national investigation involving state attorneys general and numerous federal agencies, including the Securities and Exchange Commission, the Internal Revenue Service, and the U.S. Department of Justice.
The Pennsylvania portion of the case was handled by Acting Executive Deputy Attorney General James A. Donahue III and Senior Deputy Attorney General Joseph S. Betsko, of the Attorney General’s Antitrust Section.
Source: Pennsylvania Office of the Attorney General