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Bank of America's trading practices face investigations

Bank of America
(Reuters) - The U.S. Department of Justice and the Commodity Futures Trading Commission have both held investigations into whether Bank of America (BAC.N) engaged in improper trading by doing its own futures trades ahead of executing large orders for clients, according to a regulatory filing.
The June 2013 disclosure, which Reuters recently reviewed on a website run by the securities industry regulator FINRA, sheds light on the basis for a warning by the Federal Bureau of Investigation on January 8.

The warning, in the form of an intelligence bulletin to regulators and security officers at financial services firms, said that the FBI suspected swaps traders at an unnamed U.S. bank and an unnamed Canadian bank may have been involved in market manipulation and front running of orders from U.S. government-owned mortgage giants Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB).

Reuters has since learned that Bank of America's trading practices regarding Fannie and Freddie are the subject of probes, and that the investigations are ongoing.

Bank of America spokesman Bill Halldin declined comment when asked abut the investigations.
The disclosure on the FINRA site doesn't specifically accuse Bank of America of any wrongdoing.
It says: "We understand that the (U.S. Attorney's Office) is investigating whether it was proper for the swaps desk to execute futures trades prior to the desk's execution of block future trades on behalf of counterparties."

The filing, which identifies the U.S. Attorney's Office in Charlotte, North Carolina, where Bank of America is based, adds: "We also understand that the Commodity Futures Trading Commission is conducting a parallel investigation into the trading issue."

The filing cites the bank as the source of the information.

The disclosure is in a FINRA "BrokerCheck" report on Eric Beckwith, a former managing director at Bank of America's Merrill Lynch broker-dealer division in New York. BrokerCheck is an online system that allows investors to check the backgrounds of brokers for any regulatory issues or malpractice.
Representatives from the CFTC, and the U.S. Attorney's office in Charlotte declined comment.

The filing said investigators are also looking into whether Beckwith gave accurate information to the CME Group's Chicago Mercantile Exchange in connection with an investigation by the exchange into the trading.

Halldin said Beckwith left the firm in July.

Beckwith could not be reached for comment. The CME declined to comment.

Front running occurs when someone with advance knowledge of another market participant's plan to make a sizable transaction puts an order in first, often profiting from a market move that can occur once the big trade has gone through. It is a concern for many regulators as it pushes up the cost of trades entered into by investors, including pension funds and governments.

In the bulletin, the FBI warned of "unsophisticated tradecraft" such as hand signals or special ring tones that traders were using to deliver information about impending orders in the interest-rate swaps market.

The document also said that the inspector general's office of the Federal Housing Finance Agency, the regulator of Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB), is looking into the matter.
Representatives for Fannie Mae and Freddie Mac declined to comment.

(Reporting by Karen Brettell in New York and Aruna Viswanatha in Washington, Editing by Karey Van Hall and Martin Howell)

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Penderosa January 26 2014 at 3:23 AM

The same should happen to all banks.

Flag Reply +1 rate up
BARKINGwolf January 26 2014 at 12:10 AM

I quit BofA many years ago. They were trying to charge me clerical fees that exceded the interest on a savings account.

Flag Reply +2 rate up
bmfbt12 January 25 2014 at 11:53 PM

THIS BANK ARE A BUNCH OF THIVES , ON MY MORTAGE THEY TRIED TO FORCE ME TO BUY THIER INSURANCE - BALBOA INS - WHICH WAS 9X THE PRICE OF WHAT I WAS PAYING , THEY ACTUALLY SENT ME A NEW PAYMENT BOOK 2X , THEY ARE CRIMINAL ,,THEY STRONG ARM THE LITTLE PEOPLE , THEN TRY TO GET SOMEONE TO HELP YOU ON THE PHONE A JOKE ,,THEY ALL JUST LIE ,A BUNCH OF YES PEOPLE AND DONT DO CRAP ,, I WOULD RATHER LIVE IN MY CAR THEN TAKE OUT A MORTAGE WITH THEM AGAIN !!!!

Flag Reply +4 rate up
shambunny January 25 2014 at 11:13 PM

no monthly bank statement for december2013 and january 2014. have called office last week and still no reply.

Flag Reply +1 rate up
Imam January 25 2014 at 9:34 PM

You need to understand something folks, the issue here is private central banks do not exist to serve the people/community or the nation..Private central banks exist to serve their owners to make them rich beyond the dreams of midas and all for the cost of ink/paper and the right bribe to the right official...

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fabiolenoir January 25 2014 at 8:50 PM

I can't stand this CROOK Bank.

Flag Reply +5 rate up
liquidwallpaper January 25 2014 at 8:17 PM

An American bank that is accused of stealing from it's customers?? It can't be! Banks would never do that! They always can be trusted to look out for the American economy and it's citizens. Why they were besides themselves when the mortgage meltdown happened. If it wasn't that these greedy SOB's actually run our country there would be a lot of bank presidents in prison right now. But even the ones that were found guilty have billions in a bank account to live out their lives on sunny islands in the Caribbean.

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1 reply
Linda liquidwallpaper January 25 2014 at 11:19 PM

Close all your accounts there at once.

Flag Reply 0 rate up
talari January 25 2014 at 8:17 PM

Big deal. They make $75 billion illegally and pay five billion in fines. It's a win/win situation for everyone.... except working people.

Flag Reply +4 rate up
oneguyfrompa January 25 2014 at 8:16 PM

I own 44 shares of BofA stock, and for the past 6 years I have been receiving dividend checks in the amount of $44 cents each quarter. I understand they paid zero taxes on income of appro. !3 Billion net. In prior years I was receiving quarterly dividends of $30 to $40.00. Why do the regulators ignore things like that, and let them go on cheating us retired middle income families.

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mark and sheri January 26 2014 at 12:31 AM

Use Local/Regional Credit Unions. I do.

Flag Reply +1 rate up
1 reply
vidmon mark and sheri January 26 2014 at 2:21 AM

I tried a Credit Union but there were fees for everything. I had an account with a CU and had over $35K in the bank. It was an emergency fund account and not used to pay bills. They charged me $25 for inactivity after 6 months. RU Kidding Me! They are making money on my money and they penalized me! I took the money out and put it in a free B of A saftey deposit bank until I could figure out where to invest it. I hear all the complaints about BOA yet I've had similar issues with other banks and Credit Unions too. None of them are what they used to be and probably never will be again.

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