Former Bank of America Corp. (BAC:US) executive Phillip D. Murphy, accused of conspiring to defraud bond investors through a bid-rigging scheme, pleaded guilty in federal court in Charlotte, North Carolina, the government said.
Murphy, the ex-head of the bank's municipal derivatives desk, today admitted manipulating the bidding process for investment agreements covering municipal-bond proceeds, Steven Tugander, a U.S. Justice Department lawyer, said today in an interview.
Murphy's guilty plea resulted from the U.S. government's multi-year investigation of widespread bid-rigging of investment contracts involving municipal bonds.
JPMorgan Chase & Co. (JPM:US), Bank of America, UBS AG, Wells Fargo & Co. and General Electric Co. (GE:US) have acknowledged that former employees engaged in illegal activity in connection with the scheme, and the companies paid a total of $743 million in restitution and penalties. Murphy brings to 17 the number of former employees of the banks who have pleaded guilty to charges stemming from the probe, prosecutors said.
"By manipulating what was intended to be a competitive bidding process, the conspirators defrauded municipalities, public entities and taxpayers across the country," Brent Snyder, a Justice Department prosecutor who specializes in antitrust cases, said in an e-mailed statement.
Bill Halldin, a Bank of America spokesman, declined to comment on the guilty plea. Donald Conklin and Edward Hinson, two of Murphy's defense lawyers, didn't return calls for comment.
Bank of America, which self-reported the illegal activity, has been cooperating for more than four years with prosecutors who say that bankers paid kickbacks to CDR Financial Products to rig bids on investment contracts sold to local governments.
Municipalities bought the contracts with money raised through bond sales, which allowed them to earn a return until the funds were needed for schools, roads and other public works.
The former executive appeared before U.S. District Judge Max Cogburn Jr. He'll be sentenced at a later date.
The case is U.S. v. Murphy, 12-cr-00235, U.S. District Court, Western District of North Carolina (Charlotte).