October 30, 2009

The Department of Justice charged a California financial firm and three of its executives with fraud and conspiracy in its dealings with state and local governments in the municipal bond market, The New York Times’s Mary Williams Walsh reported.In a nine-count indictment, the department charged CDR Financial Products and its founder and chief executive, David Rubin, with secretly manipulating the competition among banks and other investment firms for the lucrative business of helping governments raise money. The indictment said the participating banks then kicked back part of their profit to Mr. Rubin and his firm.

The charges were the first in a wide-ranging antitrust investigation of the municipal bond business that has been in progress for several years. Federal investigators in New Mexico had previously looked at CDR’s involvement in bond sales in that state, as well as its contributions to Gov. Bill Richardson. The attention prompted Mr. Richardson to withdraw from consideration as President Obama’s commerce secretary, but the government eventually decided not to pursue criminal charges against him.