Banc Of America Dishes Out $10 Million For Fiduciary Violations
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Bank of America Corp. just got about $10 million poorer. Its broker/dealer, Banc of America Investment Services Inc., settled charges today that it failed to disclose that it favored mutual funds affiliated with the firm.
The SEC alleges that from July 2002 through December 2004, Banc of America Investment Services did not tell clients that it was favoring two mutual funds affiliated with the firm when it was selecting investments for discretionary mutual-fund wrap-fee accounts. It also charged Columbia Management Advisors, a successor to Banc of America Capital Management, LLC, with aiding and abetting, and causing certain violations.
"BAISI's selection of mutual funds for wrap-fee clients was compromised when it favored its own proprietary funds over non-affiliated funds," said Linda Chatman Thomsen, director of the SEC's Division of Enforcement. "By using a method to select funds that was at odds with information it provided to clients, BAISI violated its duty of loyalty to its clients."
The SEC ordered the firms to distribute the $9.8 million in disgorgement, prejudgment interest and penalties to affected clients.
“This Order serves to remind the investment adviser community that the Commission will not tolerate advisers placing their own pecuniary interests ahead of their clients’,” says Fredric Firestone, associate director of the SEC’s Division of Enforcement.
