Former Bank of America CEO Subject of Investigation Over Muni-Bond Scandal

Considering Bank of America's role in the investigation its not surprising that some of its past members might end up caught in the net:

Oct. 1 (Bloomberg) -- Phillip Murphy, the former Bank of America Corp. executive who ran the municipal derivatives business at the center of a criminal investigation, is the subject of a regulatory action filed by U.S. banking regulators.

The Office of the Comptroller of the Currency, which oversees national banks, filed a “notice of charges” against Murphy in August 2008 that was placed under seal, according to a Securities and Exchange Commission filing by his current employer, Winters & Co. Advisors LLC. The Sept. 24 SEC filing didn’t disclose the nature of the notice.

Bank of America, the largest U.S. bank, has been cooperating for more than three years with Justice Department prosecutors who say that bankers paid kickbacks to financial advisers to rig bids on investment contracts sold to local governments. The bank, based in Charlotte, North Carolina, is among more than a dozen the government says conspired on the deals, according to court documents obtained by Bloomberg.

The Office of the Comptroller of the Currency files notices of charges against people when they start a civil case, just as indictments are filed at the beginning of criminal complaints, said Ralph Sharpe, a former director of enforcement at the agency who is now a lawyer with Venable LLP in Washington. “That starts the process,” he said.

In regards to CDR Financial Products:

Murphy joined Bank of America in 1998 to head its municipal derivatives unit, which sold investment agreements and interest-rate swaps to local governments. He left in 2002, after Bank of America fired Campbell for making payments to firms on transactions in which they weren’t involved, according to court records.Develop Relationships

The recipients of such payments included CDR Financial Products Inc., the investment-contract broker whose founder and two senior executives were indicted in October; UBS AG; and Winters & Co., Murphy’s current employer, according to a June 2002 e-mail from Campbell to Murphy. The message was included in filings of a lawsuit Murphy brought against Bank of America in 2003 in a North Carolina state court.

In CDR’s case, Campbell said, the payments were made to “develop a better relationship.”

The payments in turn would allegedly "encourage" CDR to drive buisness into the arms of the bank. CDR of course has a pattern of hiring consultants to local politicians for their "expertise" which frequently means connections to powerful local politicians. One big happy family I suppose.