JPMorgan Chase Admits to Anticompetitive Conduct

JPMorgan Chase & Co. has entered into an agreement with the U.S. Department of Justice to resolve the company’s role in anticompetitive activity in the municipal bond investments market and has agreed to pay a total of $228 million in restitution, penalties and disgorgement to federal and state agencies.

“Manipulating investments involving government and not-for-profit dollars is unacceptable,” said Oregon Deputy Attorney General Mary Williams. Oregon was one of 25 states that joined in the prosecution.

According to the non-prosecution agreement, from 2001 through 2006, certain former JPMorgan employees at its municipal derivatives desk, entered into unlawful agreements to manipulate the bidding process and rig bids on municipal investment and related contracts. These contracts were used to invest the proceeds of, or manage the risks associated with, bond issuances by municipalities and other public entities.

“By entering into illegal agreements to rig bids on certain investment contracts, JPMorgan and its former executives deprived municipalities of the competitive process to which they were entitled,” said Assistant Attorney General Christine Varney in charge of the Department of Justice’s Antitrust Division.  

“Today’s agreements ensure that JPMorgan will pay restitution to the municipalities harmed by its anticompetitive conduct, disgorge its profits from the illegal activity and pay penalties for the criminal conduct.   We are committed to rooting out anticompetitive activity in the financial markets and our investigation into the municipal bond derivatives industry, which has led to criminal charges against 18 former executives, remains active and ongoing.”

Under the terms of the agreement, JPMorgan agrees to pay restitution to victims of the anticompetitive conduct and to cooperate fully with the Justice Department’s Antitrust Division in its ongoing investigation into anticompetitive conduct in the municipal bond derivatives industry.  

To date, the ongoing investigation has resulted in criminal charges against 18 former executives of various financial services companies and one corporation.   One of these charged executives, James Hertz, is a former JPMorgan employee.   Nine of the 18 executives charged have pleaded guilty, including Hertz.