Wachovia Bank, a division of Wells Fargo Bank, has agreed to a $148m settlement with the Securities and Exchange Commission (SEC) and other authorities over charges for fraudulently engaging in secret arrangements with bidding agents to improperly win business.
The SEC had alleged that the bank had made millions of dollars in illicit gains during an eight-year period by manipulating at least 58 municipal bond reinvestment transactions in 25 states and Puerto Rico.
Wachovia will settle the charges by paying $46m to the SEC and has also entered into additional $102m agreements with the Justice Department, Office of the Comptroller of the Currency, Internal Revenue Service, and 26 state attorneys general.
The settlement amount with the SEC, subject to court approvals, will be returned to affected municipalities or conduit borrowers.
The bank has also agreed to pay a penalty of $25m and disgorgement of $13,802,984 with prejudgment interest of $7,275,607 without admitting or denying SEC’s allegations.
According to SEC, a total of $673m in settlements have been paid by financial institutions from corruption investigations in the municipal reinvestment industry.
JP Morgan Securities, UBS Financial Services and Banc of America Securities were also charged prior to Wachovia.