Banc of America Securities to pay $10 million

0 Comments | Deseret News (Salt Lake City), Mar 11, 2004 | by Paul Nowell Associated Press

CHARLOTTE, N.C. -- Banc of America Securities LLC, a unit of Bank of America Corp., agreed to pay a record $10 million penalty to settle the U.S. Securities and Exchange Commission's claims that it violated laws on record keeping and access requirements, the SEC said Wednesday.

The $10 million is a record fine for a violation of this type, according to the SEC.

The SEC also censured the Charlotte bank's New York-based securities arm, saying it "repeatedly failed to promptly furnish documents requested by the staff, provided misinformation concerning the availability and production status of such documents and engaged in dilatory tactics that delayed the investigation."

Specifically, the commission found that the firm failed promptly to produce an e-mail exchange relating to issues that the firm's employees knew were under investigation. The firm also failed to produce other records "concerning the personal trading activities of a former senior employee of the firm," the SEC said.

"Today's action makes clear that we will not tolerate unreasonable delay in responding to our inquiries and will act aggressively to protect the integrity of the commission's investigative processes," said Stephen Cutler, director of the SEC's enforcement division.

According to the SEC, the violations occurred during an ongoing investigation of whether Banc of America Securities made improper trades prior to the release of the firm's stock analyst reports.

"We're looking at the allegations and we'll go where the evidence takes us," said SEC spokeswoman Antonia Chion.

Bank of America spokeswoman Shirley Norton said the bank "has taken this issue seriously and has put in place a number of measures designed to improve its ability to respond to this and other regulatory inquiries."

The measures include creation of a special internal regulatory investigation unit devoted to recovering and producing information for this and other investigations, research and fact-finding, she said.

The bank also has developed new procedures and new technology to enhance e-mail recovery, strengthened the compliance team for the business units involved and changed its legal counsel dealing with the SEC inquiry, she said.

"The company believes the problems addressed by the SEC in this settlement are isolated, and we continue to look for ways to improve our ability to respond to inquiries such as this," Norton said.

Besides the censure and $10 million penalty, Banc of America Securities settled the case without admitting or denying the commission's findings.

The investigation is continuing, the SEC said.

Shares of Bank of America fell $1.78 to close at $79.99 on the New York Stock Exchange.