Bank of America has agreed in principle to buy back auction-rate securities which it sold to certain of its clients as part of a settlement with Massachusetts Secretary of State William Galvin. Under the agreement, Bank of America is expected to redeem approximately $4.8 billion of auction-rate securities.
In a press release issued earlier this morning, William Galvin, Massachusetts Secretary of State, stated “Under the terms of the agreement, Bank of America will offer to buy back beginning October 1, 2008 and continuing through until December 31, 2008, all illiquid ARS, at par value, from all Bank of America retail customers nationwide. The offer shall be extended to also include all small business customers who have up to $10 million on deposit, all ARS of all charitable entity customers who have up to $25 million on deposit. In addition, Bank of America previously agreed to buy back all ARS held by government entities, including municipalities.”
Bank of America’s settlement with Massachusetts leaves open various questions. It is not clear whether the firm will reimburse customers who sold their auction-rate securities for less than the face amount of its investment. Likewise, it appears that Bank of America is making no commitment to larger corporate and institutional customers, and larger charitable entity customers who have more than $25 million on deposit.
Page Perry is an Atlanta-based law firm with over 125 years collective experience representing investors in securities-related litigation and arbitration. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 30 occasions. Page Perry’s attorneys are actively involved in representing institutional and corporate investors in auction-rate securities cases. For further information, please contact us.