Defrauded MBIA investors get $60 million

Distributions of $60 million have been made to investors of municipal bond insurer MBIA Inc. of Armonk, N.Y., the Securities and Exchange Commission announced today.
MAR 27, 2009
By  Bloomberg
Distributions of $60 million have been made to investors of municipal bond insurer MBIA Inc. of Armonk, N.Y., the Securities and Exchange Commission announced today. The funds were distributed to 20,000 investors who purchased MBIA’s securities from Sept. 11, 1998, through Nov. 22, 2004. The distribution is part of an enforcement settlement entered into between the SEC and MBIA in 2007. The settlement arose from a sham reinsurance transaction that the company entered into to avoid having to recognize a $170 million loss. The transaction was restated in 2005 The Sarbanes-Oxley Act of 2002 gives the SEC the authority to use penalties collected in securities fraud cases to reimburse harmed investors. So far, the regulator has returned more than $2 billion to investors under the law. “The MBIA Fair Fund is the latest example of our continuing commitment to returning disgorgement and penalties to investors harmed by violations of the securities laws,” Scott Friestad, deputy director of the SEC’s Division of Enforcement, said in a statement.

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