Wachovia Bank, owned by Wells Fargo & Co, agreed to pay $148 million in a settlement with state and federal authorities over allegations of bid-rigging and other abuses in the municipal bond derivatives market.

Wachovia rigged at least 48 municipal bond reinvestment transactions in 25 states and Puerto Rico, the U.S. Securities and Exchange Commission said in a statement announcing the pact on Thursday. The SEC said Wachovia agreed to the settlement without admitting or denying the allegations.

Wells Fargo said in a statement the underlying transactions involved employees who are no longer with the firm. Wachovia and Wells Fargo merged in March 2010.

Municipal bond derivatives are contracts used to reinvest proceeds of bond sales until the funds are needed or to hedge interest-rate risk.

(Editing by Derek Caney)