(Reuters) - Massachusetts securities regulators said on Friday that they were subpoenaing Bank of America Corp for documents to determine whether the lender had knowingly overvalued assets in some investment products.
Local investors lost about $150 million in investment vehicles structured by the company’s affiliate Banc of America Securities LLC, said William Galvin, the state’s top securities regulator.
Now his office is asking the Charlotte, North Carolina-based bank to supply documents for its activities involving collateralized loan obligations.
The CLOs include LCM VII Ltd and Bryn Mawr CLO II Ltd, which were structured by the bank and sold to investors in 2007.
Bank of America spokesman Bill Halldin said the bank doesn’t comment on regulatory inquiries, except to say that it cooperates fully with them.
Galvin, who has been especially aggressive in looking into how big banks hurt small investors during the housing crisis and financial crisis, said he wanted to find out whether the issuer “was knowingly overvaluing assets in the portfolio to get them off their books and onto investors.”
The news comes one day after Bank of America and other large lenders agreed to a $25 billion settlement over alleged foreclosure abuses.
The company’s shares were down 1.3 percent at $8.07 in afternoon New York Stock Exchange trading.
Reporting By Svea Herbst-Bayliss and Rick Rothaker; Editing by Lisa Von Ahn and Gerald E. McCormick