Bank of America’s Legal Docket Just Got Lighter
Bank of America (NYSE:BAC) has another of its legal problems stemming from financial-crisis era misdeeds worked out. According to court papers filed Wednesday, the institution agreed to pay $20 million to settle a class action brought by several government entities that accused the bank of participating in a conspiracy to rig bids for municipal derivatives. That $20 million comes on top of the $62.5 million the bank contributed to a settlement fund established by the state attorneys general.
While the settlement has yet to be approved by the court, it is unopposed. A filing made in the U.S. district court in Manhattan and obtained by Reuters, showed that lawyers for the plaintiff sdescribed the settlement as “significant and of substantial benefit to the class.”
The settlement ends litigation that began in 2008. Plaintiffs, including the City of Baltimore, the Central Bucks School District, and Bucks County Water & Sewer Authority in Pennsylvania, claimed Bank of America’s actions constituted a conspiracy because the institution joined JPMorgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC), and Morgan Stanley (NYSE:MS) in resolving not to compete when issuing municipal bonds. Allegedly, the banks divided customers among themselves and then fixed and stabilized prices for financial products like the interest rates paid to bond insurers.
Eventually, this banking conspiracy drew the attention of the Department of Justice, whose probe encompassed many individuals as well as institutions. More than a dozen of people have pleaded guilty to Justice Department charges.
Other banks have already reached settlement agreements; JPMorgan agreed to a $44.6 million deal, while Wells Fargo and Morgan Stanley were charged $37 million and $6.5 million, respectively. In total, Bank of America, JPMorgan, Wells Fargo, General Electric (NYSE:GE), and UBS AG (NYSE:UBS) have all settled related claims. However, Bank of America did face less liability than other defendants because the institution cooperated sooner with the Justice Department’s investigation, reporting misconduct to the agency.
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