A finance unit of General Electric Co. on Friday became the fifth financial institution to settle federal and state charges that it rigged bids for the reinvestment of municipal-bond proceeds, boosting profits at the expense of taxpayers.

GE Funding Capital Market Services Inc. agreed to pay $70 million in restitution, penalties, and disgorgement of illegal profits under agreements with the U.S. Department of Justice, the Securities and Exchange Commission, the Internal Revenue Service, and a working group of 25 state attorneys general.

An estimated $54.9 million of that money will be available for distribution to municipalities and other tax-exempt bond issuers, GE, of Fairfield, Conn., said in a statement.

GE said it was pleased to resolve the matter involving conduct of former employees from 1999 to 2004 at a business unit that was discontinued last year. The company admitted to "illegal, anticompetitive conduct by its former traders," according to the Justice Department.

The settlement with GE Funding, based in Stamford, Conn., brings total payments under the ongoing, industrywide investigation of municipal-bond investment contracts to $743 million.

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 it is needed.

GE Funding manipulated bids for at least 203 such issues that gave them higher profits than they otherwise would have received, according to the SEC.

About 40 Pennsylvania entities are expected to share in $1.2 million in restitution, the Attorney General's Office said. Restitution for New Jersey borrowers is expected to total at least $150,000, the attorney general said.

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