Bloomberg News

Wells Fargo to Pay $148 Million in U.S. Muni Bid-Rigging Case

December 12, 2011

Dec. 8 (Bloomberg) -- Wells Fargo & Co. agreed to pay $148 million to settle criminal charges and civil claims for conspiring to overcharge state and local governments on investments, becoming the fourth bank to enter a settlement in the case.

The Securities and Exchange Commission said in a statement that Wachovia Bank, which has since been acquired by Wells Fargo, fraudulently rigged the bidding for investment deals with local governments on at least 58 transactions from 1997 through 2005.

The settlement is the latest in a more than five-year investigation into how Wall Street banks conspired with local- government financial advisers to reap excessive fees on investment deals by rigging auctions and carving the market up among themselves. JPMorgan Chase & Co., UBS AG and Bank of America Corp. previously settled similar cases.

“Wachovia won bids by playing an elaborate game of ‘you scratch my back and I’ll scratch yours,’ rather than engaging in legitimate competition to win municipalities’ business,” Robert Khuzami, the SEC’s Division of Enforcement director, said in a statement.

Wells Fargo, based in San Francisco, said the conduct was by former employees of Wachovia before its acquisition.

“Wells Fargo is pleased to have fully resolved this investigation of Wachovia Bank,” the bank said in a statement. “The underlying transactions were entered into in a business that existed at Wachovia Bank, which Wells Fargo acquired in 2008, and involved employees who are no longer with the firm.”

--Editors: Mark Schoifet, David Rovella

To contact the reporters on this story: William Selway in Washington at wselway@bloomberg.net; Martin Braun in New York at mbraun6@bloomberg.net

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net


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