Bank of America Settles SEC Case
Bank of America Corp. settled allegations by the Securities and Exchange Commission that the bank improperly accounted for a business relationship that led to a $372-million write-off in 1998.
The commission alleged that the company treated an equity investment in the New York hedge fund, D.E. Shaw & Co., as a loan and failed to adequately inform investors of the risks involved in the bank’s business alliance with D.E. Shaw.
The Securities and Exchange Commission said the bank holding company consented to a cease and desist order but was not fined. Bank of America, which was known as BankAmerica Corp. before its 1998 merger with NationsBank Corp., did not admit or deny the charges.
A senior SEC lawyer explained that the commission does not usually levy fines in financial reporting cases except under unusual circumstances. In this case, Bank of America did not profit from the allegedly illegal activity, the lawyer said.
“While the commission found that the predecessor institution violated certain provisions of the securities laws, it did not find there was any bad faith or that anyone acted in a manner intended to defraud or deceive investors,” the Charlotte, N.C.-based bank said.
Bank of America shares rose 5 cents to $63.55 on the New York Stock Exchange.
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