UBS AG and four other banks including Natixis SA and JPMorgan Chase & Co, have agreed to pay more than $100 million over the plaintiffs' claim that they connived to rig prices for municipal securities.
On Wednesday, the defendants have agreed to pay the investors of $100.5 million. As per Yahoo, France's Natixis SA and Societe Generale, two of the defendants would pay investors of $2.8 million. . If the settlement would be approved by a federal judge, it would reportedly end a private class action lawsuit that has been going on for almost eight years. UBS and the four other banks and brokerages would also end up paying over $226 million fines. JPMorgan Chase & Co. would pay $44.6 million alone.
"We will not tolerate this type of misconduct at any level," said New York Attorney General Eric Schneiderman, after announcing the states' settlement with Natixis and Societe Generale.
The City of Baltimore and the Central Bucks School District in Pennsylvania are one of the plaintiffs accusing the defendants of colluding to arrange prices for municipal derivatives. The plaintiffs argued that the fixed price for municipal derivatives resulted to lower interest rates than they would have received in a an aggressive marketplace, HITC reports. Municipalities selling bonds usually invest proceeds to spend in other means. The plaintiffs alleged that UBS and other banks have abused this process by deliberately presenting non-winning bids and by getting advance peeks at their competitors' bids.
The private settlement on Wednesday between UBS and other banks, and the investors was approved by U.S. District Judge Victor Marrero in Manhattan. Despite the agreement, the plaintiffs have dismissed the claims. UBS has agreed to pay $32 million, Natixis promised to pay $28.45 million, Societe Generale with $25.41 million, Piper Jaffray Cos with $9.75 million, Royal Bank of Scotland Group Plc's National Westminster Bank with $3.5 million, and George K. Baum & Co promised to pay $1.4 million, Reuters claims.
Aside from UBS, other banks that have settled with the investors include Bank of America Corp, Wells Fargo & Co, and General Electric Co. The U.S. Department of Justice and state regulators have also accused the municipal bond markets with corruption. Five banks have agreed to pay over $740 million in penalties, restitution and disgorgement.
