General Electric Co. agreed to pay $70.4 million to settle a criminal probe and civil claims for conspiring to rig bids on U.S. municipal-bond deals, overcharging state and local governments on investments.
GE Funding Capital Market Services, a former unit, is the fifth company to enter into a settlement in a more than five- year federal investigation. The deal will resolve investigations by the Justice Department, the Securities and Exchange Commission and the Internal Revenue Service as well as attorneys general in 25 states, the Justice Department said today in a statement.
“GE Funding’s former traders entered into illegal agreements to manipulate the bidding process on municipal investment contracts,” said Sharis A. Pozen, acting assistant attorney general in charge of the Justice Department’s antitrust division. “This anticompetitive conduct harmed municipalities as well as taxpayers.”
The settlement will bring to $743 million the amount that banks have paid to end the case, some of which is being returned to localities that were overcharged in the scheme. Bank of America Corp., JPMorgan Chase & Co., UBS AG and Wells Fargo & Co. previously settled similar cases.
GE’s settlement stems from an investigation that centered on three now-former GE employees at a unit the finance division discontinued in April 2010, the Fairfield, Connecticut-based company said in a statement today. The conduct took place between 1999 and 2004, GE said.
The settlement won’t have a “material impact” on earnings, according to GE, the world’s biggest maker of jet engines and power-generation equipment. It takes about $100 million in profit to yield 1 cent in per-share earnings at GE, whose operations span energy, aviation, health care, transportation and financial services.
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