SAN FRANCISCO – A San Francisco law firm has filed a class action lawsuit against Bank of America Corp. (NYSE: BAC) on behalf of an investor who bought auction-rate securities from the Charlotte, N.C.-based financial giant between May 22, 2003, and Feb. 13, 2008, and still held them as of Feb. 13.
Girard Gibbs LLP contends that Bank of America deceived investors about the investment characteristics of auction-rate securities and the auction market. Auction rate securities are either municipal or corporate debt securities or preferred stocks that pay interest at rates set at periodic “auctions.” Auction rate securities generally have long-term maturities or no maturity dates.
The $330 billion auction-rate market imploded in February after investors – concerned about the subprime mortgage meltdown – became skittish about those types of securities and many auctions failed to attract any bidders, resulting in a lack of liquidity.
The complaint filed by Girard Gibbs in the U.S. District Court for the Northern District of California alleges that Bank of America and its subsidiaries offered and sold auction rate securities to the public as highly liquid cash-management vehicles and as suitable alternatives to money market mutual funds.
But the law firm said holders of auction rate securities sold by Bank of America and other broker-dealers have been unable to sell the securities of major broker-dealers, including Bank of America.
The lawsuit was filed against Bank of America Corp., Banc of America Investment Service Inc. and Banc of America Securities.
Bank of America Corp. (NYSE: BAC) – the nation’s largest bank by market value, having overtaken previously No. 1 Citibank last year – is one of the world’s largest financial institutions, with clients in 175 nations, including 98 percent of the U.S. Fortune 500 and 80 percent of the Fortune Global 500. In the United States alone, it serves more than 56 million consumers and small businesses via more than 5,700 retail offices and 17,000 ATMs. To learn more, visit www.bankofamerica.com.
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