Wachovia Bank, now Wells Fargo, agreed to pay about $150 million to settle charges that former employees rigged bids for the reinvestment of $9 billion in bond proceeds between 1998 and 2004, guaranteeing Wachovia excess profits at the expense of cities, towns, and other borrowers, federal and state authorities said Thursday

The settlement requires Wachovia to pay millions in restitution to borrowers in 25 states. That figure includes $5.3 million to roughly 150 Pennsylvania municipalities and agencies, including the Pennsylvania Turnpike Commission, the Philadelphia Parking Authority, and more than a dozen school districts, State Attorney General Linda Kelly said.

When cities, agencies, and other municipal entities sell bonds to pay for construction of a parking garage, a dormitory, or a sewage plant, they generally do not immediately use all of the money. Instead, they invest it with the goals of earning a modest return and having access to the money when they need it for the project.

This is the area where Wachovia and other big financial companies - J.P. Morgan Securities L.L.C., UBS Financial Services Inc., and Banc of America Securities L.L.C., which previously reached settlements with the Securities and Exchange Commission and other authorities - allegedly engaged in a massive scheme to defraud borrowers.

The SEC alleged that Wachovia won bids through "last looks," in which it obtained information from bidding agents about competing bids, and other unfair practices.

In a statement, Wachovia said it was glad the investigation was settled, and summarized payments: "$8.9 million to the IRS; $46.075 million to the SEC, $34.518 million to the OCC [the federal Office of the Comptroller of the Currency]; and an additional $58.75 million to the state Attorneys General."

Wells Fargo also said that "the payments will not have an adverse effect on Wells Fargo's financial results and the settlement will not adversely affect the conduct of any current business of Wells Fargo."

Previously, Wells Fargo said, it had settled, subject to court approval, a related civil lawsuit U.S. District Court for the Southern District of New York for $37 million.

Among the borrowers in that case was Kendal on Hudson Inc., a continuing-care retirement community in Sleepy Hollow, N.Y., that is affiliated with Kendal Corp. in Kennett Square. Kendal on Hudson is due $113,838 in restitution from Wachovia's settlement with the Office of the Comptroller of the Currency, another of the several agreements released Thursday.

Other borrowers on the comptroller's list of 42 payments include the Pennsylvania Higher Education Facilities Authority ($931,199), Philadelphia ($137,923), and North Wales ($583,645).

When contacted Thursday, North Wales Borough Manager Nate Dysard said he had not heard of the settlement. "If it's true, it would be a good thing," he said.

A longer list of borrowers will be made public after a federal judge in New Jersey approves the SEC settlement.

Contact staff writer Harold Brubaker at 215-854-4651 or hbrubaker@phillynews.com.