Colorado is part of a $56.75 million multi-state settlement with Wells Fargo to settle allegations related to municipal bond derivatives.
The suit alleges misconduct by people working at Wachovia, which Wells Fargo acquired in 2008, and says those people engaged in anti-competitive conduct in the municipal bond derivatives industry.
The settlement is a component of a $148 million coordinated state and federal law enforcement and regulatory action involving the U.S. Department of Justice, the Securities and Exchange Commission, the Internal Revenue Service and the office of the Comptroller of the Currency.
The investigation uncovered deceptive practices at several financial institutions – bid rigging, agreements to refrain from bidding and fraud. The conduct resulted in lower yields, lower rates of return and less favorable terms for governments and nonprofits.
As part of the settlement, Wells Fargo will pay $54.5 million that will be used to reimburse government and nonprofit organizations who were injured as a result of the conduct. The banking giant will also pay $1.25 million civil penalty and $3 million to reimburse states for fees and costs incurred during the investigation.
The number of Colorado government and nonprofit groups affected by the settlement and the amount they will receive will be determined in the coming months.