Ex-Trinity Manager In Muni Bond Probe

01-19-2010 | Source: emii.com

Federal authorities have targeted a former General Electric Capital manager in a probe of bid-rigging of municipal bond contracts, Bloomberg reports. Peter Grimm, who oversaw municipal investment contracts at GE Capital’s Trinity Holdings, is one of the dozen salesmen or brokers targeted in the investigation led by the Financial Industry Regulatory Authority.

Two firms allegedly paid kickbacks to CDR Financial Products, hired by local governments to conduct auctions for investments purchased with bond proceeds, for assurances that it would win bids. Sources told Bloomberg the firms involved are: Trinity Funding and a former subsidiary of Belgian bank Dexia. GE and Dexia were not charged. In October, CDR and three of its executives were indicted by federal prosecutors on antitrust and conspiracy charges. However, the CDR Founder maintains his innocence, calling the charges “total fiction.”

According to the CDR indictment, a firm referred to as Provider B, a group of financial services entities run by a Connecticut-based corporation, is also said to have profited when two unnamed employees received information about other firms’ bids, knowing they’d bid last.

Meanwhile, ex-employees of JPMorgan Chase & Co., UBS AG, Wachovia Corp., and Bear Stearns Cos. were also informed by the Justice Department that they are targets, according to broker registration records filed with Finra. Similarly, the Securities and Exchange Commission is in the midst of investigation into municipal investment contract bidding and informed GE Capital, FSA, JPMorgan, UBS, Wachovia, and Bank of America Corp. they may face civil suits. All but FSA have said they are cooperating with the investigation and Bank of America was given amnesty by the Department of Justice since it was the first to approach prosecutors with evidence of rigging.

Click here for the story from Bloomberg.