SEC Fines Bank of America $375 Million for Market Timing Fraud

WASHINGTON – The SEC has ordered Bank of America to pay $375 million in penalties for allowing large investors to engage in rapid, short-term securities trading known as market timing. Banc of America Capital Management, LLC (BACAP), BACAP Distributors, LLC (BACAP Distributors) and Banc of America Securities, LLC (BAS) were all cited for market timing in certain Nations Funds mutual funds and for “fraudulently facilitating” market timing and late trading in Nations Funds mutual funds as well as unaffiliated mutual funds, the SEC said. From July 2000 through July 2003, BACAP and BACAP Distributors entered into arrangements with two BAS clients and allowed them to engage in frequent short-term trading in at least 13 Nations Funds mutual funds, including international funds, the SEC said. The SEC also found that BAS, a registered broker dealer, facilitated market timing and late trading by introducing broker dealers and a hedge fund at the expense of shareholders of Nations Funds and other mutual fund families. BACAP, BACAP Distributors and BAS consented to the entry of the SEC’s order without admitting or denying the Commission’s findings.