Sales of structured notes issued by Bank of America have sunk to the lowest level since January 2008 as a result of investors’ concerns about the creditworthiness of the bank, according to Matt Robinson’s Bloomberg article entitled “Bank of America Structured Notes Sales Drop as Buyers ‘Shy Away.'” Similarly, credit default swaps on BofA have surged recently, reflecting the increased premium being demanded by third parties to make good on BofA’s debt obligations should the bank default on them.
BofA second quarter loss was the largest in its history and its common stock has fallen by 44% year to date. CEO Brian Moynihan has reportedly been selling assets to meet mounting liabilities linked to defective home loans that were packaged into mortgage-backed securities and sold to investors.
According to the article, while most people think it unlikely that Bank of America will fail, the credit default swaps show that concerns are rising. BofA recently terminated two of its top executives, the bank’s heads of consumer banking and global wealth and investment management, as part of a reorganization led by CEO Brian Moynihan. Concerns will likely continue to mount following today’s announcement that BofA may eliminate as many as 40,000 jobs.
Atlanta attorney J. Boyd Page said: “These developments make it apparent that sales of these notes should never have been made to conservative investors seeking safety or seniors needing a safe source of income in retirement. I doubt that the brokers selling these products advised investors that these were investments in the unsecured debt of Bank of America and were highly risky in light of the myriad of problems facing the bank? I hope for the investors’ sakes that this doesn’t turn into a debacle like that impacting investors in Lehman principal protected notes.”
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 45 occasions. Page Perry’s attorneys have extensive experience in representing investors in cases involving principal protected notes, reverse convertibles and other structured products. For further information, please contact us.