BUSINESS
12/23/2011 12:23 pm ET

GE Muni Bid-Rigging Probe: Company To Pay $70.4 Million To Resolve Investigations

WASHINGTON (Reuters) - General Electric Co acknowledged that three former traders at a finance unit engaged in bid-rigging of municipal bonds and agreed to pay $70.4 million to resolve probes into the matter.

The agreement was with GE Funding Capital Market Services, a discontinued GE business unit, and concerned actions that occurred between 1999 and 2004. It is one of five that the U.S. Securities and Exchange Commission, Justice Department and other state agencies have reached with financial institutions charged with bid-rigging.

GE, the largest U.S. conglomerate, said on Friday that it exited the business in question in April 2010 and that the three employees involved no longer work for it.

The director of the SEC's Division of Enforcement, Robert Khuzami, said, "Our in-depth investigations have uncovered pervasive corrupt practices in the municipal securities reinvestment market, and we are requiring financial firms one by one to step up and pay the price for their misconduct."

GE Funding Capital Market Services acknowledged that some of its traders entered agreements to manipulate the bidding process for municipal investments and related contracts, among other activities, the Justice Department and SEC said.

GE said it was "pleased" to have resolved the matter and that it had already accounted for the settlement costs in prior quarters.

Its shares were up 1 percent at $18.25 on the New York Stock Exchange.

Authorities had previously reached settlements worth more than $650 million with four other companies: Wachovia Bank , J.P. Morgan Securities , UBS Financial Services and Banc of American Securities . Eighteen people including the former GE staffers, have been indicted or pleaded guilty the SEC said.

(Reporting By Jeremy Pelofsky in Washington, additional reporting by Scott Malone in Boston; Editing by Steve Orlofsky)

Copyright 2011 Thomson Reuters. Click for Restrictions.

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