SEC Probes Wachovia
The Bond Buyer
By Andrew Ackerman
September 1, 2008
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The Securities and Exchange Commission (SEC) enforcement staff has notified Wachovia Bank that they may recommend the SEC file charges against it, as a result of an investigation into alleged anti-competitive bidding practices in municipal derivatives and investment products. Wachovia Corp. disclosed the SEC warning in the 10-Q quarterly financial statement it filed with the commission in August.

The firm said in the filing that it "has been informed that in connection with the bidding of various financial instruments associated with municipal securities, the staff of the Securities and Exchange Commission is considering recommending that the commission institute civil and/or administrative proceedings against" it.

Wachovia joins several other firms that have disclosed that they have received Wells notices from the SEC with regard to this investigation, including Bear Stearns, Bank of America, Financial Security Assurance Holdings (whose parent is Dexia) and UBS Securities. In addition, General Electric disclosed late last month that a subsidiary, GE Funding Capital Markets Services, received a Wells notice.

The SEC has been conducting a civil investigation of alleged bid- rigging and anti-competitive activities associated with guaranteed investment contracts and derivatives since November 2006. The investigation is parallel to a criminal antitrust probe of such activities that is being conducted by the Justice Department.

In recent months, more than a dozen current and former broker-dealers have been notified by the Justice Department that they are targets of a grand jury investigation in New York City.

Meanwhile, state attorneys general are investigating anti-competitive practices in the municipal market.


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