January 3, 2013 / 11:26 PM / 5 years ago

Former broker sentenced for muni bond bid rigging

WASHINGTON, Jan 3 (Reuters) - A former broker with the inter-dealer brokerage unit of a Swiss bank was sentenced to 18 months in prison on Thursday for rigging bids to invest the proceeds from municipal bonds, the Justice Department said.

Adrian Scott-Jones was also fined $12,500 in a hearing at the U.S. District Court in Manhattan. He worked for the U.S. unit of Compagnie Financiere Tradition in Switzerland.

Some of the world’s largest banks have been ensnared in a probe into allegations that their employees decided in advance which investment house would win the auctions of guaranteed investment contracts - essentially investments that cities and counties buy with proceeds from municipal bond sales.

After selling bonds, municipalities park the proceeds in the interest-bearing contracts until they need the funds for work on the project they have financed.

Scott-Jones had pleaded guilty to conspiring with General Electric affiliates between 1999 and 2006 to pay cities and towns less when they invested the proceeds of municipal bonds.

Twenty people have been charged in connection with this and similar schemes following a broad investigation by the U.S. Justice Department of the $3.7 trillion U.S. municipal bond market.

A total of 19 have been convicted or pleaded guilty so far, and one is awaiting trial. Bankers working for GE, UBS AG and JPMorgan Chase & Co are among those convicted or found guilty.

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