In early July, the SEC charged JP Morgan Securities with rigging (at least) 93 muni bond reinvestment transactions in 31 states. The transactions generated millions of dollars in ill-gotten gains. The charges mirror others brought forth by other federal and state authorities.

The Allegations. The SEC charged that JPMS undermined the competitive bidding process through     fraudulent practices, misrepresentations and omissions from 1997 to 2005. As a result, municipalities     paid unfair prices for reinvestment products and were deprived of conclusive presumption that the     reinvestment products were purchased at fair market value. 

    According to the SEC, in some cases JPMS obtained information from bidding agents about competing     bids. Additionally, bidding agents deliberately obtained non-winning bids from other providers to set up     JPMS to win, and at other times JPMS deliberately submitted non-winning bids to help other firms win.

The Punishment. JPMS agreed to pay about $51.2mn to settle the SEC's charges, money that will be     returned to affected municipalities. In addition, JPMS has already agreed to pay $177mn to settle     charges brought by other agencies.

    In related action, the SEC barred former JPMS vice president and market James Hertz from the industry,     based on Hertz's December 2010 guilty plea to two counts of conspiracy and one count of wire fraud.     [SEC v. J.P. Morgan Securities LLC]