A settlement has been agreed upon by JP Morgan Chase & Co. that awards more than $700 million in damages (filed by the Securities and Exchange Commission, SEC) due to charges by federal regulators that the Wall Street bank made illegal disbursements to acquaintances of public officials to get civic bond business in Jefferson County. JP Morgan will pay civil fines of $25 million, county fines of $50 million, and termination fees of $647 million that claims the county owes from the agreements that ended in cancellation. The SEC also filed another lawsuit against Mr. Charles Lecroy and Douglas McFaddin; two former directors for JP Morgan Chase Bank who “arranged payments of millions of dollars in bogus consulting fees to two other investment banks that had a ‘close relationship’ with county commissioners”. In return for this favor, JP Morgan was compensated for their services of organizing and structuring interest-rate swaps, which were insurance agreements that supposedly defended the county’s billions of dollars in sewer bonds from fluctuating interest rates. According to SEC, JP Morgan did not release or make known any unlawful payments or conflicts of interest according to the bond offering documents but handed over the price of the expenses by billing the county an increased interest rate on the swap transaction.
Source: Birmingham News