The Texas attorney general’s office announced on December 7 that Bank of America entered into a $67-million agreement with twenty states that will resolve the states’ antitrust investigation into the bank’s marketing of municipal derivatives.

(Municipal derivatives are used to invest the proceeds of municipal bonds. Because municipal bonds commonly fund multi-year public works projects, most of their proceeds cannot be spent immediately, and must be invested to earn interest until they are ripe for use.  These investment vehicles are known as municipal derivatives, an umbrella term that refers to various tax-exempt investment vehicles.) 

The settlement comes following Bank of America’s self-reporting of its own wrongdoing to the U.S. Department of Justice.  Under the agreement, Bank of America must make full restitution to any state, local, and not-for-profit entity with which it entered into municipal derivative agreements between 1998 and 2003. 

According to the attorney general’s office, “Qualifying governmental and not-for-profit entities will receive notice of eligibility and, to obtain restitution, must participate in the claims process established under [the] agreement.  Eligible Texas entities are expected to receive approximately $3.5 million from the restitution fund.”

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