WASHINGTON — Bank of America Securities LLC, now Bank of America Merrill Lynch, has agreed to disgorge more than $36 million of ill-gotten gains and to pay an additional $101 million to other federal and state authorities to settle securities charges over its part in a scheme to rig bids for contracts to invest municipal bond proceeds.
“This ongoing investigation has helped to expose the widespread corruption in the municipal and reinvestment industry,” said Robert Khuzami, Securities and Exchange Commission enforcement director, announcing the settlement Tuesday.
“The conduct was egregious — in return for business, the company repeatedly paid undisclosed gratuitous payments and kickbacks and affirmatively misrepresented that the bidding process was proper.”
BofA Merrill neither admitted nor denied the charges.
In a related action, the SEC barred Douglas Lee Campbell, a former senior vice president and marketer in Bank of America’s municipal derivatives group, from association with any broker, dealer or investment adviser, based on his guilty plea to three criminal counts, two of conspiracy and one of wire fraud, on Sept. 9.
Campbell was at the bank from at least June 1998 through August 2002, in Charlotte, N.C., and then in New York and worked at Piper Jaffray Fixed Income Derivatives in Minneapolis after that.
Bank of America Corp. received amnesty from criminal charges from the Justice Department in connection with a parallel criminal probe of antitrust practices in connection with muni investment and derivatives contracts in 2007.
The bank also paid $14.7 million to the Internal Revenue Service to settle a Section 6700 probe and allegations of tax-law violations in connection with guaranteed investment contracts and blind pools.