UPDATE 2-JPMorgan to pay $75 mln to settle muni charges - News

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UPDATE 2-JPMorgan to pay $75 mln to settle muni charges

By: AFX | 04 Nov 2009 | 01:25 PM ET

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By Melinda Dickinson BIRMINGHAM, Ala., Nov 4 (Reuters) - J.P. Morgan Securities Inc will pay $75 million to settle charges in an unlawful payment scheme in the sewer financing of Jefferson County, Alabama, the Securities and Exchange Commission said on Wednesday. The agency said J.P. Morgan Securities will pay a penalty of $25 million and pay the county, which includes the city of Birmingham, $50 million. J.P.

Morgan also will also forfeit more than $647 million it claimed in termination fees on the swaps that left the county on the edge of bankruptcy. It was unclear what impact the settlement would have over the county's debt of around $4 billion, which threatens to force the county into the biggest municipal bankruptcy in U.S. history. But in Birmingham, officials welcomed the announcement by the SEC. "Jefferson County's situation is greatly enhanced and appears to be improving every minute," County Commission President Bettye Fine Collins told reporters. Collins wrote to the SEC in March asking that Jefferson County be included in any action taken against JP Morgan and said that today she was satisfied with its response. It is the second charge the SEC has brought in connection with the sewer derivatives and swaps. 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's enforcement division, said in a statement. The commission said that J.P. Morgan Securities did not disclose any of the payments it received or its conflicts of interest in the swap agreements. (Additional reporting by Lisa Lambert in Washington; Writing by Matthew Bigg; Editing by James Dalgleish) Keywords: MUNICIPALS/JEFFERSONCOUNTY (matt.bigg@thomsonreuters.com; Tel: +1 404 720-2891; Reuters Messaging: matt.bigg.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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