GE Funding Avoids Prosecution For Bond Investigation


Office desktop with calculator displaying the word fraud

GE Funding Capital Market Services, Inc. agreed to the payment of $70 Million to federal and state agencies to settle claims of arising from municipal bond investigations, according to a report in Law360.  The investigation reportedly discovered that the bidding process for the issuance of municipal bonds had been rigged and corrupted.  Bond traders for GE Funding allegedly had arrangements with brokers that allowed GE Funding to submit a “last look” bid based on the insider relationships, dropping its original bid and still winning the bond contract.

The company was investigated by state and federal authorities, including the Antitrust Division of the Department of Justice, the Securities and Exchange Commission, and the Internal Revenue Service.  The investigated charges included claims that the conduct violated antitrust laws by destroying competition—and violated securities and tax laws.

Other companies have reached settlements with the government over similar allegations arising from bond market activities, according to the report, including UBS AG, JPMorgan Chase & Co., and Wachovia Bank NA.  Eighteen (18) individuals have been indicted or pled guilty in connection with the investigation, including three GE Funding traders.