The U.S. Justice Department accepted a guilty plea from former JPMorgan Chase VP James Hertz, that he engaged in bid rigging and fraud in investment contracts for municipal monies.  Hertz pleaded guilty to one count of wire fraud, and agreed to cooperate with its investigation into accusations that companies decided in advance which investment house would win the auctions of guaranteed investment contracts, which cities and counties buy with the proceeds from municipal bond sales - i.e., a place for municipalities to "park their cash" between the time bonds are floated and when the money is actually paid out - i.e., earn a return until the cash is needed for specified public works program. The U.S. Treasury Department encourages competitive bidding to ensure that localities get market rates.  

According to the DOJ, from 1994 to 2007, Hertz would market investment agreements and other contracts.  The bid-rigging took place from at least 2001 to 2006.  "Hertz and co-conspirators also agreed to submit intentionally losing bids for investment agreements or other municipal finance contracts that were steered to other financial institutions, giving the false appearance that these deals had been bid competitively."

Hertz is the 8^th person to plead guilty in the investigation.  Three others who pleaded guilty had worked for CDR Financial Products, aka Rubin/Chambers, Dunhill Insurance Services Inc.  Two CDR employees and one former employee were indicted in October 2009 and charged with participating in bid-rigging and fraud. Their trial has been set for September 2011.

One person who pleaded guilty had worked for UBS AG, another worked for BofA, while others worked for Financial Guaranty Insurance Company (FGIC), GE Trinity Plus and Financial Security Assurance (FSA).   [Reuters, 11/30;  Bloomberg, 12/1]