Bank of America Corp (NYSE:BAC) To Pay $131.8 Million In CDO Settlement To SEC

Posted In Business - By Linda Barnes On Monday, December 16th, 2013 With 0 Comments

Dallas, Texas 12/16/2013 (ustradevoice) – American banking giant Bank of America Corp (NYSE:BAC) continues to be surrounded with settlement plagues, with another settlement looming large over it, this time with the U.S. securities regulator SEC. In an allegation by the Securities and Exchange Commission over the sale of collateralized debt obligations (CDO) pertaining to Octans I CDO Ltd., Norma CDO I Ltd. and Auriga CDO Ltd., Bank of America (BoA) had failed to disclose the key involvement of hedge fund manager Magnetar Capital LLC and its equity holding in the CDOs sold during 2006 and 2007.

The beleaguered bank has agreed to pay SEC about $131.8 million in settlement of the charges, which comprise of penalty charges worth about $56.3 million for each CDO, while the rest is attributed to prejudgment interest. Clouded by a recent spate of legal and settlement woes, Bank of America Corp (NYSE:BAC) has seen many issues stemming from what experts term as gross mismanagement and misconduct. This has cost the behemoth dearly to the tune of billions of dollars in liabilities, with $43 billion paid in recent cases like the Freddie Mac and Sally Mae claims, in addition to numerous smaller fines adding up to millions of dollars. Another $9 billion remains to be cleared in pending litigations, in addition to another $14 billion considered in reserves. Mostly recently, the banking conglomerate saw itself indicted by U.S. federal and state authorities for not observing compliance standards and documentation procedures in a $25 billion agreement concluded in 2012 involving mortgage services.

Meanwhile, CEO Brian Moynihan reiterated in a recent conference that the Volcker rule would not impact the conglomerate, emphasizing that necessary changes were in place to comply with the new norms including the stopping of proprietary trading and private equity. The Volcker rule, instituted by U.S. president Obama, restricts U.S. banks from making investments that might not benefit their customers. Bank of America Corp (NYSE:BAC)’s shares dropped from $15.25 to $15.18 in their December 13 trading on NYSE, with after-hours trading figures vacillating between $15.16 and $15.18.

About the Author

- Linda Barnes is known for her in-depth politics and economic reporting on national and international news related to finance.

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