Banking, finance, and taxes
Bank of America (BAC) Acquires SEC Investigation As Part Of Countrywide Deal
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The SEC informal investigation of Bank of America’s (BAC) recently acquired Countrywide Financial has been in progress for months and now there’s a new development. And it’s not good for Bank of America: the investigation has gone formal, meaning that the SEC will now have the power to subpoena documents related to whatever it is that it’s looking into regarding Countrywide — no details have been made public, but it is known that there was an investigation into chairman and CEO’s Angelo Mozilo’s stock sales
Perhaps some of the text from the multitude of securities fraud class-action lawsuits filed against Countrywide will provide some possibilities: New York State Comptroller Thomas P. DiNapoli is serving as a lead plaintiff in one of the lawsuits and said in a press release that . "… unlawful actions and omissions by Countrywide deprived investors of the information needed to make prudent decisions."
That is securities fraud, in a nutshell. The SEC investigation is certainly a headache for Bank of America and any lawsuit or settlement on that end will likely add tremendous credence to the class-action side — and Bank of America has the deep pockets sure to attract every class-action lawyer in the country.
The deal has been looked at as one that will in all probability end in failure since its consummation, and a formal SEC investigation doesn’t seem to brighten its prospects. The greatest synergy of the deal may be in legal resources. State and federal regulators have just subpoenaed BofA for information related to its sales of auction rate securities.
Zac Bissonnette
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