Bank of America Corp (NYSE:BAC) Stares At Probe

Posted by Chris Bell January 27, 2014 0 Comment 1694 views


As per the regulatory filing dated June, Bank of America Corp (NYSE:BAC) is under fire, as it has come under the scanner of both the U.S. Department of Justice as well as the Commodity Futures Trading Commission. The regulatory bodies will ascertain through a probe, if the bank was engaged in executing its own future trades before executing block future trades for clients.

Charge of Malpractices

The incident was although reported back in June, came under light recently after FINRA website revealed the basis of the bulletin issued by the Federal Bureau of Investigation on January 8. As per the bulletin, the FBI suspected swap-traders at undisclosed banks to have been involved in improper trade practices carried out on orders from Fannie Mae (FNMA) and Freddie Mac (FMCC). The bank is also alleged of front running orders from the government sponsored enterprises (GES). In the meanwhile, the bank’s representative Bill Halldin refused to comment about the investigations. However, Fannie Mae and Freddie Mac’s regulator,Federal Housing Finance (FHF) Agency,is also believed to be scrutinizing the matter.

Eric Beckwith’s Role

The revelation is made in a FINRA “BrokerCheck” report, which covers Eric Beckwith, who was managing director at Bank of America’s Merrill Lynch broker-dealer division and had left the company in July. The filing indicated about the possible probe on Beckwith to ascertain if he had disclosed the real facts to the Chicago Mercantile Exchange in connection with the investigations.

Front running has become a concern for most of the regulators as it escalates the cost of the investors, which include government entities and pension funds. Front running happens when someone holding information on a large transaction misuses it in their favor by executing trades before the ‘big’ transaction happens. The person misusing the information stands to get profited once the ‘big’ transaction is executed.



About Chris Bell

Chris Bell is an investing reporter for GDP Insider. Chris covers financial markets and Wall Street, concentrating on developments affecting individual investors and their portfolios. Chris is also over consumer reporter and covers a wide variety of issues ranging from housing to immigration to urban poverty. Chris graduated from the University of Scranton with a degree in Communication and Philosophy. Chris's diligent investigations earned him the honor of being named "Best Reporter" once by the Headliners Foundation of Texas and once by the Houston Press Club.

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