Iowa is part of a multi-million dollar settlement between two investment firms and several states.
The spokesman for Iowa’s Attorney General, Geoff Greenwood, says the companies sold what are called municipal derivatives — which let entities invest bond money before it is needed.
“The city or county can earn some money on that bond money that is just sitting in a savings account. So, these are investments that are helpful for a city that has gotten bond money for a large project, and it can earn money in the short term,” Greenwood says. Investigators say the two companies weren’t properly conducting the sale of the derivatives.
“We allege that these companies, among others, rigged bids. They were not straightforward about how much interest would really be paid. They submitted non-competative courtesy bids, all to get extra business from cities, and other governmental entities or nonprofits,” Greenwood explains. Greenwood says Natixis Funding Corporation of New York and Sciete Generale of Paris, France agreed to the settlement.
“It’s about a 56 million dollar case. And we are hoping that once we find out how many customers there were in Iowa, that we can get some of that money back to them,” Greenwood says. He says they are still working to find all the Iowa entities that might have invested with the companies.
“We’ll let them know that they may be entitled to money through this settlement. But ultimately in many cases, these were taxpayers who were overcharged — and we intend to get some of that money back to the taxpayer,” Greenwood says. The two companies deny any wrongdoing.