A former unit of General Electric Co. (GE) agreed to pay $70.35 million to U.S. regulators to resolve complaints about the company's role in anticompetitive activity in the municipal bond investments market.
The Justice Department announced Friday that GE Funding Capital Market Services Inc. accepts responsibility for illegal, anticompetitive conduct by its former traders from 1999 through 2004.
The company acknowledged that certain former GE Funding traders entered into unlawful agreements to manipulate the bidding process on municipal investment and related contracts, and caused GE Funding to make payments and engage in other related activities in connection with those agreements through at least 2006. These contracts were used to invest the proceeds of -- or manage the risks associated with -- bond issuances by municipalities and other public entities.
This anticompetitive conduct harmed municipalities, as well as taxpayers, said Sharis Pozen, acting assistant attorney general in charge of the Justice Department's Antitrust Division, in a statement.
We will continue to use all the tools at our disposal to uphold our nation's antitrust laws and ensure competition in the financial markets, Pozen added.
Under the terms of the settlements, GE Funding will pay $24.9 million to the Security and Exchange Commission, $11.2 million to the Internal Revenue Service and $34.25 million to the group of state attorneys general.
GE said in a statement released Friday that the settlement amount was fully provisioned in prior quarters and is not expected to have any material impact on GE's earnings.
JPMorgan Chase & Co. (JPM), UBS AG (UBS) and Wachovia Bank N.A. (WFC) also reached agreements with the Department of Justice and other federal and state agencies to resolve anticompetitive conduct in the municipal bond derivatives market.
On May 4, 2011, UBS agreed to pay a total of $160 million in restitution, penalties and disgorgement to federal and state agencies for its participation in the anticompetitive conduct. On July 7, 2011, JPMorgan agreed to pay a total of $228 million and on Dec. 8, 2011, Wachovia Bank agreed to pay a total of $148 million.