Department of JusticeOffice of Public AffairsFOR IMMEDIATE RELEASETuesday, December 7, 2010Bank of America Agrees to Pay $137.3 Million in Restitution to Federal and State Agencies as a Condition of the Justice Department's Antitrust Corporate Leniency ProgramWASHINGTON - Bank of America entities have agreed to pay a total of $137.3 million in restitution to federal and state agencies for its participation in a conspiracy to rig bids in the municipal bond derivatives market and as a condition of its admission into the Department of Justice's Antitrust Corporate Leniency Program, the Department of Justice announced today.Bank of America entered into agreements with the U.S. Securities and Exchange Commission (SEC), the Internal Revenue Service (IRS), the Office of the Comptroller of Currency (OCC), and 20 State Attorneys General. The global resolution with these federal and state entities provides for payment of restitution to the IRS and to municipalities harmed by Bank of America's anticompetitive conduct in the municipal bond derivatives market. In a related matter, Bank of America entered into a written agreement with the Federal Reserve Board to address certain remedial measures.According to agreements announced today, Bank of America employees engaged in illegal conduct, including bid rigging and other deceptive practices, in connection with the marketing and sale of tax-exempt municipal bond derivatives contracts. . .
READ full DOJ September 13, 2012 Press ReleaseDepartment of JusticeOffice of Public AffairsFOR IMMEDIATE RELEASEThursday, September 13, 2012Justice Department Reaches Settlement with Bank of America to Resolve Allegations of Discrimination Against Recipients of Disability IncomeBank of America N.A. has agreed to maintain revised policies, conduct employee training and pay compensation to victims to resolve allegations that it engaged in a pattern or practice of discrimination on the basis of disability and receipt of public assistance in violation of the Fair Housing Act (FHA) and the Equal Credit Opportunity Act (ECOA).The settlement, which is subject to court approval, was filed today in federal court in Charlotte, N.C., where Bank of America is headquartered. The terms of the settlement require Bank of America to pay $1,000, $2,500 or $5,000 to eligible mortgage loan applicants who were asked to provide a letter from their doctor to document the income they received from Social Security Disability Insurance (SSDI). Applicants who were asked to provide more detailed medical information to document their income may be paid more than those who were asked to have a doctor verify their source of income. Bank of America will hire a third party administrator to search approximately 25,000 loan applications involving SSDI income to identify any other victims. Under the settlement, Bank of America will conduct training of its underwriters and loan officers and will monitor loan applications to ensure that applications from disabled individuals are treated in a manner consistent with applicable law.This lawsuit arose as a result of three complaints filed by loan applicants with the U.S. Department of Housing and Urban Development (HUD). After investigating the complaints, HUD undertook a broader investigation into Bank of America's practices. Bank of America revised its policies for documenting disability income during HUD's investigation. The Assistant Secretary of HUD elected to have the case heard in federal court and referred the case to the Department of Justice. The HUD complainants will receive a total of $125,000 to their harm and compensate them for costs associated with their loan applications."Loan applicants with disabilities should not be subjected to invasive requests for medical information from a doctor when they are applying for credit," said Thomas E. Perez, Assistant Attorney General for the Justice Department's Civil Rights Division. "Today's settlement shines a light on a practice that violates the Fair Housing Act and the Equal Credit Opportunity Act." . . .
Department of JusticeOffice of Public AffairsFOR IMMEDIATE RELEASEThursday, August 21, 2014Bank of America to Pay $16.65 Billion in Historic Justice Department Settlement for Financial Fraud Leading up to and During the Financial CrisisAttorney General Eric Holder and Associate Attorney General Tony West announced today that the Department of Justice has reached a $16.65 billion settlement with Bank of America Corporation - the largest civil settlement with a single entity in American history - to resolve federal and state claims against Bank of America and its former and current subsidiaries, including Countrywide Financial Corporation and Merrill Lynch. As part of this global resolution, the bank has agreed to pay a $5 billion penalty under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) - the largest FIRREA penalty ever - and provide billions of dollars of relief to struggling homeowners, including funds that will help defray tax liability as a result of mortgage modification, forbearance or forgiveness. The settlement does not release individuals from civil charges, nor does it absolve Bank of America, its current or former subsidiaries and affiliates or any individuals from potential criminal prosecution."This historic resolution - the largest such settlement on record - goes far beyond ‘the cost of doing business,'" said Attorney General Holder. "Under the terms of this settlement, the bank has agreed to pay $7 billion in relief to struggling homeowners, borrowers and communities affected by the bank's conduct. This is appropriate given the size and scope of the wrongdoing at issue." . . .
Bank of America Corp. has agreed to pay $180 million to settle a lawsuit by private investors who accused the bank and others of manipulating foreign-exchange rates.The bank's decision comes after rivals J.P. Morgan Chase & Co. and UBS AG had agreed to settle with the same investors. Other banks, including Citigroup Inc. and BarclaysPLC, are expected to settle soon, according to people familiar with the situation.Regulators around the world have been examining whether banks improperly manipulated the forex rates, and half a dozen banks settled with U.S. and U.K. regulators in November. At the time, Bank of America paid $250 million to the Office of the Comptroller of the Currency, though its U.S. rivals Citigroup and J.P. Morgan paid more than $1 billion each in fines to various regulators. . .
The Securities and Exchange Commission is investigating whether Bank of America Corp. broke rules designed to safeguard client accounts, potentially putting retail-brokerage funds at risk in order to generate more profits, according to people familiar with the inquiry.For at least three years, the bank used large, complex trades and loans to save tens of millions of dollars a year in funding costs and to free up billions of dollars in cash and securities for trading that Bank of America otherwise would have needed to keep off-limits, these people said.Now, the SEC is investigating whether the bank's unusual strategy violated customer-protection rules and whether the bank misled regulators about what it was doing, these people said.. . .Known in industry circles as Rule 15c3-3, a reference to the section where it is tucked within the Securities Exchange Act of 1934, the policy requires banks and other financial firms that handle customer trades to calculate at least once a week their net liabilities to clients-in other words, how much more banks owe to clients, in the form of deposits and other funds, than they are owed from clients, in the form of assets such as loans.The greater the overall-or net-amount that the banks owe their clients, the more money the banks need to set aside in reserve funds, known as "lockup" accounts, to pay their customers in an emergency. Funds in those lockup accounts must be segregated from other accounts, including the banks' own.Having billions of dollars idling in lockup is expensive for banks, partly because the money generally can't be put to other profitable but potentially risky uses such as trading.New York-based executives in Bank of America's Merrill Lynch brokerage arm devised an array of complex trades and loans to reduce the amount of money trapped in lockup, according to people familiar with the trades.One variety of the strategy, launched around 2009, was called "leveraged conversion." A small team from Bank of America's equities desk recruited a handful of clients, including wealthy individuals, to put up token amounts of their own money-a few million dollars in some cases-and in exchange receive loans of nearly 100 times those amounts, the people said.Then Bank of America would arrange large trades, with those customers taking the opposite side, in ways that satisfied other financing needs at the bank. For example, if the bank needed to hedge its exposure to a multibillion-dollar position in, say, Apple Inc.'s shares, perhaps because of a trade with another client, the bank might arrange for one of the leveraged-conversion customers to do a big Apple-centric trade using the loan the bank had provided.One result of the trades was to drastically increase the amounts of money that customers owed to the bank, thereby reducing the net amount that the bank owed its clients. That, in turn, reduced how much Bank of America had to stash in the 15c3-3 lockup.Another benefit: Bank of America was able to curtail its use of more expensive funding from alternate sources such as the debt markets or other parts of the bank. . .
Former Bank of America Broker Suspended and Fined For NSF Checks and ATM Withdrawals (BrokeAndBroker.com Blog, December 6, 2011)For the purpose of settling rule violations alleged by the Financial Industry Regulatory Authority ("FINRA") and without admitting or denying the regulator's findings and without an adjudication of any issue of law or fact, Brandon Garrett Searcy submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Brandon Garrett Searcy (AWC, 2011026299401, December 1, 2011).
In August 2001, Searcy first became registered in the securities industry and arrived at Bank of America Investment Services ("BOA") in June 2005. On January 7, 2011, BOA terminated him.
NSF ChecksDuring the first two weeks of November 2010, Searcy allegedly wrote three checks totaling $400 from his BOA checking account that he deposited into his BOA savings account - on the same day that Searcy made the savings account deposits, he also withdrew the deposited amount using his debit card at an ATM.
FINRA alleged that Searcy deposited into his savings account each check knowing that there were insufficient funds to cover the amount of the drawn check; and, similarly, there were insufficient funds in his savings account to cover the withdrawal. As such, FINRA had Searcy coming and going: He issued checks against insufficient checking account balances and he withdrew from his savings account sums attributable to those kited checks.
Violations and Sanctions
Not only was Searcy's alleged conduct contrary to BOA's policy regarding personal accounts, but FINRA alleged it to be a violation of its Rule 2010 for failing to "observe high standards of commercial honor and just and equitable principles of trade." In accordance with the AWC, FINRA imposed upon Searcy a three-month suspension with any FINRA member firm in any capacity and a $2,500 fine.
Bill Singer's Comment
Wall Street employees may be surprised - perhaps stunned - by this case. After all, it's not as if Searcy's alleged misconduct involved either a public customer or securities fraud. To the contrary, Searcy ran afoul of the purported "high standards of commercial honor" and "just and equitable principles of trade" that are supposedly hallmarks of Wall Street.
Wall Street's "high standards" and "just and equitable principles." Ummm, is FINRA really serious? Just exactly when did the securities industry impose such vaunted standards and principles upon itself - maybe I missed that day?
Then of course, there's the whole BOA as victim scenario. BOA - as in the firm that's trying to cut a settlement for hundreds of millions of dollars related to allegations of its role in mortgage market fraud and questionable overdraft fees on debit cards. Of course, the Department of Justice and the Securities and Exchange Commission don't always pound away at the highly standarded and principled BOA but, hey, what else is new. BOA, Wells Fargo, UBS, Goldman Sachs, Morgan Stanley, Bear Stearns, Lehman Bros., JP Morgan, and, now Brandon Searcy. All in the same FINRA enforcement boat. All treated the same. Blind justice. Blind regulation.
So, the small fish Searcy gets a three-month vacation and a couple thou in fines as his punishment. Frankly, ho hum. If there is anything remarkable about this case, it's that the zealous cops at FINRA managed to investigate and resolve this tempest in about one year - a very aggressive timeframe for a regulator that has come under fire in recent years for not being overly aggressive or successful.
If the outcome in this case is any harbinger, I'm sure Jon Corzine is quaking in his boots. Wall Street's cops are hot on his MF Global heels. Ready to pounce and close out the case within a year. After all, if FINRA comes after him and actually manages to establish credible allegations of misconduct, why, geez, Corzine could easily find himself with a three month suspension and a $2,500 fine. I mean, you know, given all the high standards and principles stuff.
I'm sorry if my dripping sarcasm splashed you. Can I lend you a towel?