The Financial Times, citing unnamed people familiar with the matter, is reporting that Spitzer is close to agreeing an undisclosed penalty with Bank of American for allegedly helping a hedge fund engage in illegal trading in mutual fund shares. If all goes according to a plan, Financial Times says the settlement could come down sometime this month.
Spitzer’s reported settlement talks would bring to a close months of investigation the attorney general has conducted into the extent of Bank of America’s involvement with Canary Capital’s market-timing and late-trading arrangements (See Spitzer Fund Abuse Probe Pumps Out More Subpoenas ). The attorney general took an especially keen interest in the Bank of American case due to how high up Spitzer contends the scandal went, all the way up to the head of the bank’s asset management unit Richard Demartini.
Even though the scandal touched off a wave of employee bloodletting at Bank of America, Demartini was spared the chopping block, electing to step down after the firm completed its $47-billion merger with Fleet Boston Financial Corp. That deal is expected to close during the first half of this year (See BoA’s DeMartini to Step Down After Fleet Merger ).
Should theCharlotte, North Carolina-based Bank of America reach a settlement, the nation’s third largest would be the largest financial institution to date to reach an accord with Spitzer. Previously, Spitzer’s office has reached settlements with Alliance Capital Management ($250 million), and Massachusetts Financial Services ($225 million) (See Alliance, Regulators Reach Settlement , MFS Scandal Settlement Finalized).