| NEW YORK, July 25
NEW YORK, July 25 A former Bank of America Corp
derivatives trader who pleaded guilty to conspiring to
falsify documents was spared prison on Friday after spending
years helping the government probe bid-rigging in the $3.7
trillion municipal bond market.
Brian Zwerner, a former manager of Bank of America's
municipal derivatives desk, was sentenced to spend three years
on probation and pay a $10,000 fine by U.S. District Judge
Victor Marrero in New York.
Zwerner had pleaded guilty in 2011 to conspiring to make
false entries in reports and other papers sent from his desk to
According to court papers he has also agreed to pay Bank of
America $890,000 and settle related U.S. Securities and Exchange
Commission (SEC) civil charges.
"I deeply regret my actions," the Atlanta resident told
The government's antitrust investigation has resulted in
numerous convictions and $743 million in settlements with Bank
of America, UBS AG, General Electric Co,
JPMorgan Chase & Co and Wells Fargo & Co.
Zwerner's lawyer said her client's cooperation also helped
the SEC understand complex mortgage products at the heart of the
"He was their big break in the Abacus case and their case
against Wachovia," the lawyer, Katya Jestin, said in court.
Wells Fargo paid $11 million in 2011 to resolve SEC claims
over collateralized debt obligations sold by Wachovia Corp,
which it bought at the end of 2008. Zwerner had begun working
there in 2005.
Goldman Sachs Group Inc, meanwhile, agreed in 2010 to
pay $550 million to settle claims it misled investors in a CDO
tied to subprime mortgages called Abacus 2007-AC1.
Jestin declined to comment after the hearing. SEC
representatives did not immediately respond to requests for
The Justice Department said from 1999 to 2002, Zwerner
conspired to falsify bank records related to marketing profits,
so Bank of America could pay kickbacks to brokers including
Beverly Hills, California-based CDR Financial Products Inc.
Prosecutors said these kickbacks enabled the bank to pay
brokers to manipulate bidding for investment agreements or other
municipal finance contracts, and win certain bids.
Bank of America, which reported the misconduct after
uncovering it, reached a $137.3 million settlement with federal
and state authorities in 2010, and agreed to pay $20 million to
resolve a related class action in 2013.
Phillip Murphy, a former managing director of Bank of
America's municipal derivatives desk, is the last defendant
convicted in the municipal bond probe to still await sentencing.
Zwerner had been expected to testify against him.
The case is U.S. v. Zwerner, U.S. District Court, Southern
District of New York, No. 11-cr-00293.
(Reporting by Nate Raymond in New York; Editing by Tom Brown)