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SEC investigating Bank of America

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SEC investigating Bank of America

Bank of America reportedly faces an investigation over whether it violated regulations designed to protect funds in client accounts. The Securities and Exchange Commission examination focuses on whether the nation’s second-largest bank’s suspected conduct potentially put retail brokerage funds at risk, with the aim of boosting profits, The Wall Street Journal reported Tuesday, citing unidentified people familiar with the inquiry.bank_of_america

According to the report, SEC investigators are examining Bank of America’s compliance with a rule designed to ensure that investment banks and trading firms segregate cash and liquid securities that can be used to repay customers in case of a catastrophic bank failure. For roughly three years, the Charlotte, N.C.-headquartered bank used large transactions and loans to save millions of dollars in costs and free billion of dollars in cash and securities for trading that otherwise would have been disallowed, the report said.

The transactions took place in Bank of America’s Merrill Lynch division, which the bank agreed to acquire in a 2008 all-stock deal amid the national fiscal crisis, the report said. The bank reportedly ended the strategy in mid-2012. The SEC declined to comment. Bank of America declined to confirm or deny the existence of a regulatory inquiry other than to say it cooperates fully with regulators and authorities.

However, the bank issued a statement that said: “These transactions began at Merrill Lynch prior to the merger with Bank of America and received extensive review and approval. The firm fully complied with the rules designed to safeguard client funds.”


February 2018
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