B of A Asks Regulators to Investigate Rumors

BankAmerica, stung by persistent market rumors that have driven its stock price sharply lower over the past three days, on Thursday urged U.S. and foreign regulators to investigate the source of the “false and malicious rumors.”

Since the rumors of BankAmerica’s impending collapse or sale to another bank began to circulate Tuesday morning, the bank’s common stock price has lost about 15% of its value, falling to $10.50 from $12.25. Volume has been extremely heavy.

In New York Stock Exchange composite trading on Thursday, BankAmerica was the second most heavily traded issue, with 4.6 million shares changing hands, about eight times its normal daily volume. The price of a share was off 87.5 cents, closing at $10.50.

Rumors Dismissed

The selloff was sparked by rumors that swept through markets in the United States, Europe and Japan that BankAmerica was about to declare bankruptcy, that U.S. regulators were propping it up with loans from the Federal Reserve, and/or that a hasty merger with Citicorp or another U.S. bank was being arranged. The bank, federal regulators and stock analysts all dismissed the rumors as unfounded.

“These rumors are totally without merit, possibly spawned by speculators for their own intentions and potentially very injurious to the bank, its shareholders, customers and the financial community in general,” said BankAmerica Chief Executive Samuel H. Armacost in a statement issued Thursday from the company’s San Francisco headquarters.

‘No Basis in Fact’

“These rumors have no basis in fact, and we believe those who are fair-minded will ignore them. However, their persistence and specificity suggest that some participants may be manipulating the market to their own advantage by circulating false and malicious statements,” Armacost said.

The bank has requested that the Securities and Exchange Commission, the New York Stock Exchange, the Chicago Board Options Exchange and market authorities in Tokyo and London investigate the sources of the rumors.

The NYSE confirmed that it had received the request for an investigation and that it would comply. The SEC declined comment.

It is illegal to spread false rumors about the financial condition of a bank or to manipulate stock prices by disseminating damaging and untrue statements about a listed company.