JP Morgan Securities settles with the SEC over Jefferson County charges

City A.M. Reporter
JP Morgan Securities has agreed to pay $75m (&pound;45m) to settle charges in an unlawful payment scheme in the sewer financing of Jefferson County, the Securities and Exchange Commission (SEC) said yesterday.<br /><br />The agency said JP Morgan Securities will pay a penalty of $25m and pay the Alabama county, which includes the city of Birmingham, $50m.<br /><br />JP Morgan also will forfeit more than $647m it claimed in termination fees on cancelled interest-rate swap contracts, which left the county on the edge of what would have been the biggest municipal bankruptcy in US history.<br /><br />The federal regulator had accused the firm of making unlawful payments to friends of public officials to win municipal bond business in the county. <br /><br />It is the second charge the SEC has brought in connection with the sewer derivatives and swaps.<br /><br />Two former managing directors at JPMorgan Securities were also charged. The bankers made unlawful payments to win business and earn fees, Robert Khuzami, director of the SEC&rsquo;s enforcement division, said in a statement.<br /><br />The commission said that JP Morgan Securities did not disclose any of the payments it received or its conflicts of interest in the swap agreements. In Birmingham, a county official welcomed the announcement by the SEC.<br /><br />&ldquo;Jefferson County&rsquo;s situation is greatly enhanced and appears to be improving every minute,&rdquo; said county commission president Bettye Fine Collins.