BoA signs leniency agreement with US Department of Justice

Risk staff
01 Mar 2007

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Regulation

The deal, which protects the bank from any criminal antitrust prosecution, results from its providing the department with information about bidding practices in municipal derivatives last year.

The department has probed other New York firms for information on municipal bonds practices, following concerns over illegal activity surrounding the proceeds from municipal bonds, and how the money is invested prior to spending on public projects.

The Department of Justice is investigating possible anti-competitive practices, including 'blind pool' transactions in which underwriters issue bonds for unspecified projects, the proceeds of which are then re-invested, raising questions about whether these investments were properly bid out. There are also concerns about tax evasion by underwriters and consultants. The industry faced scrutiny in the 1990s over the marking-up of bond prices.

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