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(Reuters) — UBS A.G., Natixis S.A. and four other banks and brokerages agreed to pay just over $100 million to settle investor claims that they conspired to rig prices for municipal securities.
If approved by a federal judge, the settlements disclosed on Wednesday would end seven years of private class action litigation, and result in more than $226 million of payouts from 11 defendants.
The plaintiffs, including the City of Baltimore and the Central Bucks School District in Pennsylvania, accused the defendants of conspiring to fix prices for municipal derivatives, causing them to receive lower interest rates than they would have gotten in a competitive marketplace.
Municipalities that sell bonds typically invest proceeds they do not need to spend immediately elsewhere and hire banks and brokers to seek out competitive bids.
The defendants were accused of abusing this process through such means as getting advance peeks at their rivals' bids or purposely submitting nonwinning bids.
Wednesday's settlements include $32 million with UBS, $28.45 million with France's Natixis, $25.41 million with Societe Generale, $9.75 million with Piper Jaffray Cos., $3.5 million with Royal Bank of Scotland Group P.L.C.'s National Westminster Bank, and $1.4 million with George K. Baum & Co., court papers show.
The defendants denied wrongdoing. Their settlements require approval by U.S. District Judge Victor Marrero in Manhattan.
Other defendants that have settled include JPMorgan Chase & Co., Wells Fargo & Co., Bank of America Corp., General Electric Co. and Morgan Stanley. JPMorgan's $44.6 million settlement was the largest.
A lawyer for the plaintiffs did not immediately respond to requests for comment.
The U.S. Department of Justice and state regulators have also prosecuted corruption in the municipal bond markets.
At least five banks agreed to pay more than $740 million in penalties, restitution and disgorgement, including $228 million for JPMorgan, and at least 17 people have been convicted or pleaded guilty, the U.S. Justice Department has said.
The case is In re: Municipal Derivatives Antitrust Litigation, U.S. District Court, Southern District of New York, No. 08-02516.