Second guilty plea in US muni contract probe

* 2nd guilty plea in muni bid-rigging case

* Trial for top executives is February next year

WASHINGTON, March 11 (Reuters) - A second former employee of CDR Financial Products pleaded guilty on Thursday to bid-rigging, fraud conspiracy and wire fraud that has been the subject of a nearly four-year federal probe into contracts to invest monies from municipal bonds, the Justice Department said.

The former employee, Matthew Rothman, pleaded guilty to the three counts at the U.S. District Court in Manhattan and has agreed to cooperate with the investigation, the U.S. Justice Department said on Thursday.

In February, another CDR employee, Daniel Moshe Naeh, pleaded guilty to the same three charges and agreed to cooperate with the ongoing investigation.

The Treasury and Justice Departments and the Internal Revenue Service began a wide-sweeping investigation in 2006 into how guaranteed investment contracts, which municipal bond issuers had purchased to invest their debt proceeds, are awarded.

In October, executives from CDR, which is also known as Rubin/Chambers, Dunhill Insurance Services Inc, were indicted and charged with participating in bid-rigging and fraud. Their trial has been set for Feb. 7, 2011.

CDR, which is based in Los Angeles, has said the charges are without merit.

The Justice Department said that Rothman admitted to participating in the bid-rigging from at least as early as 2001 until at least November 2006.

He admitted that he and other co-conspirators chose in advance who would win the bid for certain investment agreements, the Justice Department said.

The maximum penalty for bid-rigging is 10 years in prison and a $1 million fine. The fraud charges come with a maximum penalty of five years in prison and a $250,000 fine. The wire fraud charge has a maximum 20 years and a $250,000 fine.

(Reporting by Diane Bartz; Editing by Bernard Orr)