GE agrees to settle class action lawsuit on rigging municipal bonds for USD 18.25 million
Citing court papers, Reuters reported that General Electric Co has agreed to settle a class action lawsuit that accused the company of fixing municipal bond bids. GE would pay up to USD 18.25 million as settlement, the report said. The agreement, which still needs to be approved by the court, comes from the litigation that started in 2008, which claimed that lenders and finance firms had worked together to rig prices for securities known as municipal derivatives.
The settlement by GE would cover the activities of its three businesses. The units are GE Funding Capital Market Services, Trinity Funding Co and Trinity Plus Funding Co. The settlement came just two days after the approval of the court was sought by the plaintiffs involving a separate settlement of USD 20 million for its alleged role in rigging bids for municipal derivatives.
The report also said that the deal came nearly two weeks after the reversal of convictions by a federal appeal court of three former banking executives of GE Capital who were charged with conspiracy of rigging bids for contracts to invest municipal bond proceeds. The reason for the reversal of the convictions of bankers Dominick Carollo, Steven Goldberg and Peter Grimm still has to be released by the 2nd US Circuit Court of Appeals. They were convicted last year.
Moreover, the settlement of GE also followed another settlement the company made earlier involving claims made by the state attorneys general. That settlement amounted to USD 30 million. Three years ago, GE also agreed to resolve another probe conducted by the US Department of Justice which also involved the rigging of bids of municipal bonds. GE settled that for USD 70 million.
Investors claimed in the lawsuit that fixing prices of the municipal bonds was a violation of antitrust law. They also got lower interest rates as a result of bid-rigging, the report said.