Allegations of Interest Rate Rigging
Eight major financial institutions, including JPMorgan Chase and Bank of America, have agreed to pay $70 million to settle a decade-long lawsuit alleging widespread fraud and collusion.
The whistleblower, Edelweiss Fund LLC, accused the banks of inflating interest rates on municipal bonds to generate millions in illicit profits. The bonds, known as variable rate demand obligations (VRDOs), are used by municipalities to fund long-term projects.
Settlement Details
The settlement includes:
- $33.6 million to the state of Illinois
- $14.4 million to Edelweiss principal Johan Rosenberg as a reward
- $22 million for Edelweiss’s legal expenses
Whistleblower’s Motivation
Rosenberg said his goal was to expose the alleged misconduct and ensure that the public benefits from the projects funded by VRDOs.
“We have uncovered much that was unknown about how this market is operated,” Rosenberg said. “Remarketing agents have behaved in ways that are detrimental to the public interest.”
Impact on Financial Institutions
The settlement is a significant blow to the reputation of the financial institutions involved. It also highlights the importance of whistleblowers in exposing corporate wrongdoing.
