Lawsuit against BofA settled with $3 billion dollars to be returned to investors

A lawsuit against Banc of America Securities LLC and Banc of America investment Services, Inc., the investment banking and securities broker-dealer arm of Bank of America, was at last settled with an agreement reached with the California Department of Corporations. The agreement includes the return of over $3 billion dollars to investors in California.

The agreement puts an end to the investigation launched into the BofA’s misrepresenting auction rate securities (ARS) to investors as safe, cash-equivalent products, even though the products faced increasing liquidity risk.

“This multi-billion dollar agreement represents significant relief for many individual and small business investors who lost access to funds in the collapse of the auction rate securities market,” Deputy Commissioner Alan Weinger said. “We are pleased that the outcome of these negotiations will result in the return of money to many investors who suffered by the freezing of their assets when the auctions failed.” 

Apart from returning funds to the investors Bank of America will also pay administrative penalties to the State and agree to abide by a Desist and Refrain order prohibiting violations of California's securities law including failure to supervise its employees in the sale of Auction Rate Securities.