JPMorgan Chase & Co., the biggest U.S. bank by market value, says it may be sued for violating federal securities laws for selling fixed-income financing that helped push Alabama’s most-populous county to the brink of bankruptcy.
The potential sanctions by the U.S. Securities and Exchange Commission, disclosed yesterday in two sentences of a 162-page quarterly regulatory filing, relate to a series of bond and interest-rate swap sales in 2002 and 2003 for sewers in Jefferson County, which covers about 1,125 square miles including Birmingham, the state’s largest city with more than 240,000 residents.
Since credit markets seized up in 2007, Jefferson County’s annual sewer debt payment more than doubled. At least seven former JPMorgan bankers are under scrutiny in a Justice Department criminal antitrust investigation of the sale of unregulated derivatives to local governments across the U.S., federal regulatory records show.
The SEC investigation of New York-based JPMorgan is the first by the commission to directly challenge the ways in which securities firms sell derivatives to state and local governments. Derivatives are contracts whose values are tied to assets, including stocks, bonds, commodities and currencies, or events such as changes in interest rates or the weather.
Wells Notices
At least seven banks and insurers, including Charlotte, North Carolina-based Bank of America Corp. and UBS AG of Zurich, have received so-called Wells Notices saying they may be sued by the SEC in conjunction with an investigation into bid rigging or collusion in the sale municipal derivatives. Other institutions that have received notices from the SEC, such as Wachovia Corp., have since been taken over by other banks.
Bank of America was granted amnesty by the Justice Department for its cooperation in the national antitrust probe. In exchange for voluntarily providing information and offering continuing cooperation, the federal government agreed not to bring criminal charges against the bank.
A recap on what Happened in Jefferson County Alabama:
Its pretty straightforward. Starting in 1996 the mayor began to push various deals including a land deal known as Vision Land. Being a man of fine tastes he found his expenses outmatched his revenues, and turned to Montgomery investment banker Bill Blount and lobbyist Al LaPierre. Blount would become the underwriter for every bond offering and LaPierre became a vehicle by which Mayor Langford would recieve bribes. LaPierre would "lend" money to the Mayor to make everything nice and legal and essentialy launder the bribes. In 2006 the SEC began to investigate some of these deals and by December of last year a special federal grand jury in Birmingham returned a 101-count indictment against Langford, the former commission president; Montgomery investment banker Bill Blount and lobbyist Al LaPierre. The indictment includes charges of conspiracy, bribery, fraud, money laundering and filing false income tax returns in what prosecutors described as a long-running bribery scheme related to sewer bonds and other Jefferson County financial transactions. It was this sewage deal which might bankrupt the municipality and involves CDR Financial Products Charles LeCroy of J.P Morgan Chase.
The indictment includes charges of conspiracy, bribery, fraud, money laundering and filing false income tax returns in what prosecutors described as a long-running bribery scheme related to sewer bonds and other Jefferson County financial transactions.
In short Mayor Larry Langford:
- Is facing 101 counts on corruption and bribery charges
- The man who bankrupted Jefferson County Alabama
- Helped increase fees on middle and working class people
- The man who did it for designer suits and rolex watches.
- Mayor Langford's Culture of Corruption.
- Who helped J.P Morgan Chase and other Financial Groups overcharge by 100 million in fees Jefferson County.
- The same Mayor who has saddled his constituents with a billion dollar debt.
And to think the Journal is calling for reform in the industry.
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