Connecticut is sharing in a $34.25 million, multi-state settlement with General Electric’s capital markets unit over its alleged misconduct involving the sale of municipal bond derivatives, authorities say.
State Attorney General George Jepsen announced Friday that the Connecticut Housing Finance Authority is expected to collect $185,000 as its share of the settlement with GE Funding Capital Market Services Inc. in Stamford. Parent GE is based in Fairfield.
Connecticut also will receive an as-yet undetermined share of a $1.25 million civil penalty and $3 million in fees and expenses for the investigation, authorities said.
Connecticut and New York led the three-year investigation for the working group of 24 states and the District of Columbia.
As part of the settlement, GE Funding agreed to pay $30 million in restitution to affected state agencies, municipalities, school districts and nonprofits nationwide that entered into guaranteed investment contracts with GE Funding and two affiliates — Trinity Funding Co. LLC and Trinity Plus Funding LLC — between 1999 and 2005.
Municipal bond derivatives are contracts that tax-exempt issuers use to reinvest proceeds of bond sales until the funds are needed, or to hedge interest-rate risk. Guaranteed investment contracts are a specific type of municipal bond derivative.
The statessay they began their fraud investigation in 2008.
