Bank of America Auction Rate Securities

Bank of America is the largest commercial bank in the United States by deposits. It was originally known as NCNB, or North Carolina National Bank. In 1998 the business expanded to California, purchased the San Francisco BankAmerica and changed its name to Bank of America. Since then the corporation has merged with other banks all over the world and has grown considerably.

Bank of America and its predecessors have been involved in a number of controversies. Some of their policies have received criticism over the years. For example, they have been accused of closing accounts without prior warning and clearing checks or debit card uses in order of largest to smallest without telling customers about this policy.

The Auction Rate Securities Crisis

The bank’s most recent scandal relates to the collapse of the auctions rate securities market. On May 22, 2008 investors filed a class action lawsuit against the Bank of America. They allege that, as a matter of corporate policy, the bank deliberately misled clients about the nature of this type of security. The plaintiffs claim that they were told auction rate securities were highly liquid and worked in a similar way to money market mutual funds.

In truth, according to the plaintiffs, the securities only appeared liquid because Bank of America and other broker-dealers were artificially manipulating the market. They allege that broker-dealers like Bank of America knew the market was in danger of collapsing and wanted to rid themselves of these securities by selling them to anyone they could. Bank of America spokespeople deny any wrongdoing and insist that the company had no way of foreseeing the market collapse.

If you have been the victim of auction rate securities fraud, contact a knowledgeable Bank of America auction rate securities lawyer at 800-220-9341.