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From Banking and Finance Law Daily, February 25, 2016

New York AG secures $56M settlement for municipal bond market fraud

By Charles A. Menke, J.D.

New York Attorney General Eric T. Schneiderman’s office has reached multimillion dollar settlements with Natixis Funding Corp. and Société Générale over allegations 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, with $53,865,000 being paid into a Settlement Fund, under the settlement terms announced by Schneiderman. The Settlement Fund 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.

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

MainStory: TopStory BankingOperations CrimesOffenses EnforcementActions NewYorkNews OversightInvestigations SecuritiesDerivatives

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