SEC v. Bank of America Corp., No. 09-6829, (S.D.N.Y. 2013)
The case of SEC v. Bank of America Corp.
Did Bank of America Corp. violate federal securities laws by failing to properly disclose material information about mortgage-backed securities it issued, in violation of the Securities Act of 1933 and the Securities Exchange Act of 1934?
Under the Securities Act of 1933 and the Securities Exchange Act of 1934, issuers of securities are required to provide potential investors with comprehensive and truthful information, preventing any fraudulent misstatements or omissions of material facts in offering documents.
Bank of America was found to have violated federal securities laws by failing to adequately disclose material information related to the quality of mortgages underlying its securities. The court approved a settlement agreement where Bank of America agreed to pay significant penalties without admitting or denying the allegations.
This case is a landmark example of regulatory action following the financial crisis, underscoring the importance of transparency and accountability in securities markets. For law students, it offers insight into how federal securities laws are applied to corporate entities and highlights the broader implications of legal ethics, corporate governance, and financial regulation. The case also serves as a critical study on the role of settlements in concluding high-stakes litigation involving large financial institutions.