Bank of America Faces SEC Investigation Over Record-Keeping Violations

Bank of America's securities arm is being investigated by the Securities and Exchange Commission over alleged record-keeping violations related to an inquiry into trading activities. The S.E.C. claims that the unit was improperly storing certain documents and did not produce them in a timely manner. This is not the bank's first investigation, as it is also facing two other probes, including one into its relationship with a hedge fund and another over alleged biased stock research. The investigation is likely to have reputational consequences for the bank, as seen in the reaction of investors and analysts.

Key Takeaways:

• Bank of America's securities arm is facing a civil action by the Securities and Exchange Commission over alleged record-keeping violations.
• The S.E.C. claims that the unit was improperly storing certain documents and did not produce them in a timely manner.
• This is not the bank's first investigation, as it is also facing two other probes: one into its relationship with a hedge fund and another over alleged biased stock research.
• The investigation is being conducted in cooperation with the bank's San Francisco office, according to a spokeswoman.
• Bank of America has received a Wells notice detailing the allegations, but declined to comment further.
• The investigation may lead to reputational damage for the bank, as seen in the reaction of investors and analysts, such as Bob Maneri of Victory Capital Management.
• The bank's shares fell $1.34, to $79.09 in composite trading on the New York Stock Exchange.
• The bank is still providing the S.E.C. with documents related to the inquiry that began in November 2001.

Statistics:

• The S.E.C. is investigating Banc of America Securities for alleged record-keeping violations.
• The bank's shares were up 12 percent last year.
• Shares of Bank of America fell $1.34, to $79.09 in composite trading on the New York Stock Exchange.
• $8.25 million: the total fine paid by five securities firms in December 2002 for failing to retain e-mail messages sought by regulators.
• $1.65 million: the fine paid by each of Citigroup's Smith Barney brokerage unit, Deutsche Bank AG, Goldman Sachs Group, Morgan Stanley, and U.S. Bancorp Piper Jaffray Inc. in December 2002.

Sources:

• "Bank of America Gets Fined $1.34 a Share Because of SEC Investigation" (no publication date or author mentioned)
• "Regulators Investigate Bank of America's Securities Division" by (no author mentioned)