According to a statement released by the North Carolina Department of Justice, N.C . State, Wake County and Charlotte will collectively receive $126,326 from JP Morgan Chase as part of a settlement for its bid-rigging actions during a period of time spanning from the late 1990s to 2005. N.C . State became involved in this incident because the University has a contract under a municipal bond that was managed by JP Morgan Chase.
JP Morgan Chase cheated to win the right to manage the North Carolina municipal bond at a low financial cost during what was supposed to be a competitive bidding process. As economics professor Douglas Pearce explains, the type of bid rigging that JP Morgan Chase has admitted to is one of obtaining information that was supposed to be held secret during the bidding process.
By obtaining information on what their competitors were bidding, JP Morgan Chase was able to bid just high enough to win the right to manage the bonds but not as high as they would have bid had they not known what their competitors were bidding. This is a particularly serious offense because as Attorney General Roy Cooper said in a written statement, “At a time when every dollar counts, this scheme unfairly kept money from local governments and schools….”
Bid rigging is both unlawful and unethical according to the N.C . Judge association of judicial judges, but JP Morgan Chase is voluntarily coming forth to settle the issue. However, the bond issue relating to N.C . State is just one of nearly 100 cases of rigging municipal bond auctions. To settle this incident JP Morgan owes money to the Securities and Exchange Commission, the Office of Comptroller of Currency, the Internal Revenue Service and various municipalities of which the $126,326 for N.C . State, Wake County and Charlotte is just a small part. In total, JP Morgan Chase will pay $228 million.
However Pearce said this is still a relatively small incident for big organizations like JP Morgan Chase. In fact, according to the Wall Street Journal, the investigation on JP Morgan Chase’s anti-competitive activity focused on “a small desk that was discontinued.” Despite the seriousness of the bid rigging actions JP Morgan Chase was involved in, this incident will not likely cause great harm to company’s future ventures.
While N.C . State and others involved in this matter will receive this money, according to Provost Arden’s Executive Assistant Sarah Cohen, the N.C . Department of Justice is still handling the money.
According N.C . Depart of Justice Public Information Officer Noelle Talley, as of July 15th, “the exact amount of money that Wake County, N.C . State and Charlotte will receive is still being determined.”
For now it seems all parties involved will have to wait just a little longer for this matter to be resolved.