DALLAS -- Texas Attorney General Greg Abbott has settled an antitrust investigation of Houston-area financial advisor R. Craig Rathmann for allegedly colluding with his former employer RBC Capital Markets on municipal utility district bond deals.
Rathmann's firm, Rathmann & Associates, agreed to pay $450,000 in lieu of civil penalties and to reimburse the Attorney General for investigative costs and attorneys' fees, according to the AG's office.
RBC had already settled with the attorney general.
"As a result of this conspiracy, Houston-area Municipal Utility Districts represented by Rathmann & Associates paid inflated underwriting fees on their bond refundings," Abbott's office said Oct. 10.
In exchange for RBC agreeing not to solicit Rathmann's financial advisory clients, Rathmann agreed to use RBC as lead underwriter on bond refundings, and to secure an underwriting fee of 1.25% of the bond sale proceeds, according to the attorney general's filings in the case.
The settlement also prohibits Rathmann & Associates from entering into similar anticompetitive arrangements and requires it to inform clients of their right to choose an underwriter and negotiate its compensation.
Under an agreement announced Oct. 3, RBC will pay $990,000 in restitution to 63 MUDs while promising not to use anti-competitive practices in the future, Abbott's office said.
During a nine-year period, the fees paid by Rathmann's clients were well above market rates, according to analysis by the attorney general's office.
"We are pleased that the Texas Attorney General has agreed to settle this case," an RBC spokesman said after that firm's settlement was announced. "We continue to believe that we did not violate any antitrust laws. This involves an 11-year-old employee separation agreement and will not impact our business."
Rathmann was unavailable for comment Oct. 14, an employee of the firm said.
Richard Williamson is a reporter for The Bond Buyer
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