Bank of America reveals 3rd probe
By Scott Silvestri
Bloomberg News Service
Bank of America Corp., the third-biggest U.S. bank, said yesterday its securities arm may face civil action by the Securities and Exchange Commission because of alleged record-keeping violations during an investigation of "certain trading activities."
The SEC alleges the unit 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 is still providing the SEC with documents in an inquiry that began in November 2001.
Bank of America, led by Chief Executive Officer Kenneth Lewis, faces at least two separate probes besides the one revealed yesterday. The SEC and other regulators are investigating an illegal mutual-fund trading relationship it had with a hedge fund. The National Association of Securities Dealers is probing Banc of America Securities for allegedly biased stock research.
"You never like to see any of this stuff come to light," said Bob Maneri, who helps manage $45 billion, including Bank of America shares, at Victory Capital Management in Cleveland. "You run the risk of reputational damage."
Banc of America Securities, the New York-based unit, is cooperating with the investigation that involves its San Francisco office, bank 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 $8.25 million in fines for failing to retain e-mails sought by regulators looking into analysts' conflicts of interest.
Citigroup Inc.'s Smith Barney brokerage unit; Deutsche Bank AG; Goldman Sachs Group Inc.; Morgan Stanley; and U.S. Bancorp Piper Jaffray Inc. agreed to pay $1.65 million each, the NASD and the SEC said at the time.
