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JPMorgan Chase, Bank of America and Six Financial Giants Pay $70,000,000 Settlement Over A*********s of ‘Widespread Fraud and Collusion’
Henry Kanapi
March 23, 2024
Eight financial giants are shelling out tens of millions of dollars to settle a decade-long whistleblower lawsuit.
JPMorgan Chase, Bank of America, Citigroup, Morgan Stanley, Fifth Third Bancorp, Barclays, Bank of Montreal (BMO) and William Blair were sued in 2014, a*****d of reaping millions in illicit profits by rigging interest rates on municipal bonds.
The whistleblower, identified in the lawsuit as Edelweiss Fund LLC, says the firms have paid $70 million to settle the lawsuit.
Edelweiss a*****d the group of Wall Street firms of “widespread fraud and collusion” after the state of Illinois hired them to market municipal bonds known as variable rate demand obligations (VRDOs) at the lowest possible interest rates.
VRDOs are tax-exempt bonds issued by municipalities to get long-term financing, usually spanning 20 to 30 years.
But instead of marketing the bonds at low interest rates, the banks allegedly inflated the rates to generate millions of dollars in fees and discourage investors from converting the debt securities to cash.
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With the settlement “finalized and e******d,” the state of Illinois is set to collect $33.6 million while Edelweiss principal Johan Rosenberg will receive $14.4 million as a reward for bringing the lawsuit on behalf of the government. The remaining $22 million will be set aside to pay for the legal expenses incurred by Edelweiss through the years.
Says Rosenberg,
“My goal when I started scrutinizing the manner in which rates on VRDOs were reset in about 2010 was to shine a light on this market because of the benefit the public receives from the critical government projects that VRDOs fund.
In the years since the litigation began, we have uncovered much that was unknown about how this market is operated and how remarketing agents behave.”
Source: The Daily Hodl
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