Edelweiss accused the group of Wall Street firms of “widespread fraud and collusion” after the state of Illinois hired them to market municipal bonds known as variable rate demand obligations (VRDOs) at the lowest possible interest rates.
VRDOs are tax-exempt bonds issued by municipalities to get long-term financing, usually spanning 20 to 30 years.
But instead of marketing the bonds at low interest rates, the banks allegedly inflated the rates to generate millions of dollars in fees and discourage investors from converting the debt securities to cash.
With the settlement “finalized and executed,” the state of Illinois is set to collect $33.6 million while Edelweiss principal Johan Rosenberg will receive $14.4 million as a reward for bringing the lawsuit on behalf of the government. The remaining $22 million will be set aside to pay for the legal expenses incurred by Edelweiss through the years.
VRDOs are tax-exempt bonds issued by municipalities to get long-term financing, usually spanning 20 to 30 years.
But instead of marketing the bonds at low interest rates, the banks allegedly inflated the rates to generate millions of dollars in fees and discourage investors from converting the debt securities to cash.
With the settlement “finalized and executed,” the state of Illinois is set to collect $33.6 million while Edelweiss principal Johan Rosenberg will receive $14.4 million as a reward for bringing the lawsuit on behalf of the government. The remaining $22 million will be set aside to pay for the legal expenses incurred by Edelweiss through the years.