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Bank of America Settles with SEC

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Bank of America settled with the SEC for $515 million, and five former employees of the bank’s mutual fund unit were charged for trading abuses.

Those charged are Peter Martin, Erik Gustafson, Joseph Palombo, James Tambone and Robert Hussey who worked in the Columbia Mutual Fund Adviser and Distributor units of the bank which became a part of Bank of America when it acuired FleetBoston Financial.

“It certainly wasn’t a pleasant part of their past,” said Mark Batty, who helps manage13.4 million Bank of America shares, at PNC Advisors. “Hopefully it’s something that is not forgotten, and they will be extra diligent about when it comes to compliance.”

An article from The Street says,

“Market-timing is the term for a shady strategy in which mutual fund shares are bought and sold frequently in order to profit from price differences in different markets. Another offense being probed by regulators, late trading, is the buying or selling of mutual fund shares after their 4 p.m. closing price, in order to take advantage of late-breaking or market-moving news.

Bank of America played a central role in the trading scandal and helped the now-infamous Canary Capital Partners hedge fund to engage in late trading. The bank’s brokerage arm set up a special trading platform to permit Canary, among others, to place trades.”

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Bank of America Settles with SEC
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