Municipal Bond Business Is Currently Underway. A federal investigation into bid rigging and other illegalities in the municipal bond business is currently underway, The New York Times reported today. The investigation has already claimed one political casualty – former New Mexico Governor Bill Richardson, who withdrew as Commerce Secretary Nominee amid a federal investigation into how a political donor from California won a lucrative contract to put together a bond deal for that state.
According to The Los Angeles Times, the firm involved in the Richardson withdrawal was CDR Financial Products. The company acts as an investment middleman by helping government and nonprofit entities broker competitive bids from banks, insurance companies and others. It helped put together a complex bond financing deal for a $1.6-billion highway and transportation construction program for the New Mexico authority. According to The Los Angeles Times, CDR collected $1.5 million in fees from the deal.
The FBI Focused on the CDR.
The Los Angeles Times report said the FBI focused on the CDR- New Mexico deal because the firm was not included on an initial list of the most qualified bidders. The bidding was later reopened for review, and a state committee headed by one of Richardson’s former top aides helped select CDR. According to the Los Angeles Times report, the CDR probe is just one facet of a national investigation of “pay-to-play” practices in the municipal bond market.
Today, The New York Times is reporting that various federal agencies and state attorneys general having been investigating possible collusion between banks and other companies that have helped state and local governments with municipal bond deals. Though the agencies involved – including the Securities and Exchange Commission and the Justice Department – would not release details of the probe to the Times, the paper’s report said a variety of evidence collected so far indicated companies did not engage in open competition for municipal bond business, “but secretly divided it among themselves”. The results, The Times said, was added costs to taxpayers, and in some cases “exotic financial structures that blew up.”
The New York Times also reports that people involved in this investigation assert that such abuse of municipal bond contracts is widespread and has been going on for years. On lawyer who is representing some of the municipal governments caught up in the probe told the Times it was “one of the longest-running, most economically pervasive antitrust conspiracies ever to be uncovered in the U.S.”
Need Legal Help Regarding Municipal Bond?
New York | Brooklyn | Queens | Long Island | New Jersey | Florida
Call us at: 1-800-YOURLAWYER (800-968-7529) | Schedule your free consultation