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January Newsline: EPA Cracks Down on Violations; Cat Invests in India; Stimulus Projects At Work
The Wall Street bank did not admit or deny the SEC allegations in agreeing to pay a $25 million civil fine and a $50 million payment to the county, and to forfeit $647 million in termination fees it claims the county owes from the canceled swap agreements.
In a civil lawsuit, the SEC also accused LeCroy and MacFaddin of securities law violations. The agency is seeking unspecified restitution from them. They plan to contest the charges.
The SEC alleged that JPMorgan, LeCroy and MacFaddin made about $8 million in undisclosed payments to close friends of several Jefferson County commissioners. Starting in July 2002, LeCroy and MacFaddin solicited the county for a $1.4 billion sewer bond deal.
JPMorgan failed to disclose any of the unlawful payments or conflicts of interest in the bond offering documents, but passed on the cost of the payments by charging the county higher interest rates on the swap transactions, according to the SEC.
New York-based JPMorgan said in a statement it has since discontinued its municipal swap-exchange business. The settlement with the SEC “does not impair any outstanding Jefferson County bonds and JPMorgan continues to work to achieve a responsible restructuring of Jefferson County’s financial affairs,” the statement said.
The SEC last year charged former Birmingham mayor Larry Langford and two others for undisclosed payments to Langford related to municipal bond offerings and swap agreement transactions made while he was president of the Jefferson County Commission. On Oct. 28, Langford was found guilty in the related criminal case on 60 counts of bribery, mail fraud, wire fraud and tax evasion.(See related story in Underground Construction, December issue, pg. 5.).
Retail investors increasingly participate in the municipal bond market, seeking safe investments with reliable returns. The financial crisis and tight credit have made it more difficult for some municipal securities deemed higher risk to be sold.
Stimulus projects begin in Schererville
Stimulus money has worked its way to Schererville, IN, where several town projects are under way.
The town’s wastewater treatment plant is the site where the bulk of upcoming shovel-ready infrastructure projects will take place.