BofA Shareholders Turn Down Regulatory Study Committee Formation

May 26, 2004 ( - Bank of America Corp. (BofA) shareholders turned aside a proposal to appoint independent directors to a special study committee to review the bank's mutual fund trading policies.

BofA said that about 8.32% of the votes cast favored the proposal made by the AFL-CIO Reserve Fund, which owns 1,000 Bank of America shares, according to a Reuters story. The initiative also called for the committee to report to shareholders on how well the bank complies with securities laws.

The fund made the proposal after the bank and FleetBoston Financial Corp. agreed in March to pay $515 million and give up $160 million of fees to settle charges that it helped favored clients trade mutual funds improperly at the expense of ordinary shareholders (See  BofA, Fleet Come to Terms with Spitzer, SEC in Fund Probe ). The settlement involved no admission or denial of wrongdoing.

The Charlotte, North Carolina-based BofA, which bought Fleet on April 1, said it is taking several actions that comprise what Chief Executive Kenneth Lewis has called a “comprehensive road map” to improve fund policies. “The board’s opinion (is) that the company has gone well beyond” the AFL-CIO proposal, said Charles Gifford, BofA chairman, at the bank’s annual meeting in Charlotte. “It is absolutely our expectation that this comprehensive road map that Ken talks about will take place,” he said.

As part of the settlement, Bank of America committed to ensure “best-in-class” governance policies for the board of trustees of its Nations Funds. Eight fund directors are to depart within one year for their role in letting the Canary Capital Partners LLC hedge fund market time the funds.

National and state regulators have been pursuing a wide-ranging mutual fund investigation focusing on late trading, market timing, and certain fund sales practices.