Antitrust Law Daily Wrap Up, ANTITRUST NEWS: States secure $56M settlement in municipal bond derivatives rigging, (Feb 25, 2016)

By Charles A. Menke, J.D.

New York Attorney General Eric T. Schneiderman and other state attorneys general announced multistate settlements with Natixis Funding Corp. and Société Générale over allegations that the companies engaged in fraudulent and anticompetitive conduct in municipal bond derivative transactions with state and local government entities and nonprofit entities across the United States.

Natixis agreed to pay $29,950,000, while Société Générale will pay $26,750,000. A total of $53,865,000 will be paid into a settlement fund, which will be applied to restitution for municipalities, counties, government agencies, school districts, and nonprofits that the states allege were harmed when they entered into municipal derivatives contracts with the two companies.

Other states joining the settlement include Colorado, Connecticut, Florida, Idaho, Illinois, Iowa, Kansas, Maryland, Michigan, Missouri, Montana, Nevada, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, Wisconsin, and the District of Columbia.

The settlements stem from investigations launched in 2008 by more than 20 states together with U.S. Department of Justice and federal regulatory agencies that revealed anticompetitive and fraudulent conduct involving individuals at a number of large financial institutions, including Natixis and Société Générale, and certain brokers who worked with the companies.

According to Schneiderman, the misconduct included rigged bids, the submission of noncompetitive courtesy bids, and fraudulent certificates of arms-length bidding to government agencies. As a result of these actions, local and state governments, as well as nonprofit entities, entered into municipal derivatives contracts on less advantageous terms than they would have otherwise.

Companies: Natixis Funding Corp.; Société Générale

News: Antitrust NewYorkNews