BofA’s Securities Division May Face SEC Civil Action
Bank of America Corp. said Friday that its securities arm might face civil action by the Securities and Exchange Commission because of alleged record-keeping violations during an investigation of “certain trading activities” in the unit’s San Francisco office.
The SEC alleges that Banc of America Securities was “improperly storing certain documents relevant to an inquiry and not producing the requested documents in a timely manner,” the bank said in statement. Charlotte, N.C.-based Bank of America said it still was providing the SEC with documents related to an inquiry that began in November 2001.
Bank of America faces at least two separate probes besides the one revealed Friday. The SEC and other regulators are investigating an illegal mutual fund trading relationship it had with a hedge fund. The National Assn. of Securities Dealers is probing allegations of biased stock research at Banc of America Securities.
“You never like to see any of this stuff come to light,” said Bob Maneri, who helps manage about $45 billion at Victory Capital Management in Cleveland. “You run the risk of reputational damage.”
Bank of America shares, up 12% in the last 12 months, fell $1.34 to $79.09 on the New York Stock Exchange on Friday.
New York-based Banc of America Securities is cooperating with the investigation, spokeswoman Eloise Hale said. The bank has received a so-called Wells notice detailing the allegations, she said, declining to comment further.
“We had difficulty finding physical and electronic documents due to technical reasons and consequently were delayed in responding,” Hale said. The bank has conducted its own review, Hale said, declining to elaborate.
SEC spokesman John Nester declined to comment.
In December 2002, five securities firms agreed to pay fines for failing to retain e-mails sought by regulators investigating possible analyst conflicts.
Citigroup Inc.’s Smith Barney brokerage unit, Deutsche Bank, Goldman Sachs Group Inc., Morgan Stanley and U.S. Bancorp Piper Jaffray Inc. agreed to pay $1.65 million each, NASD and the SEC said at the time.
