GE Funding Pays State $320k for Fraudulent Bond Practices
Publication: Missouri News Horizon | View original article
15:13PM on December 28 2011
(Jefferson City, MO) -- Missouri local governments, non-profits and school districts will soon be able to reclaim more than $320,000 from a national bonding company accused of engaging in illegal, non-competitive business practices.
Missouri is one of many states that will receive a total of $34.25 million from GE Funding Capital Marketing Services, Inc. as part of a settlement reached in an ongoing nationwide investigative effort by multiple states.
"This settlement will help to repay the cities, taxpayers, and not-for-profit organizations that believed financial institutions like GE Funding were engaged in competitive bidding and fair dealing, which we now know was not the case," Attorney General Chris Koster said while announcing the settlement.
States taking part in this bond investigation found evidence that certain traders at GE Funding were working in concert with brokers to give the company a "last look" at bids for public bond products, guaranteeing that GE Funding would win the contract. Koster also said the traders and brokers worked to arrange for purposely non-winning courtesy bids to be submitted by other financial institutions.
As part of GE Funding's multistate payout, the company has agreed to pay $30 million in restitution, $1.25 million in civil penalties and $3 million in fees and other costs. This is part of global settlement were $70 million.
GE Funding is the fifth financial institution to settle bonding fraud claims with Missouri and other states, following Bank of America, UBS AG, JP Morgan and Wachovia. To date, Missouri entities are eligible to receive more than $5 million from these five settlements.