Summary
This 8-K filing from Bank of America Corporation, dated October 13, 2003, primarily addresses two significant events. First, the company adopted amended and restated Bylaws on September 24, 2003. Second, and more critically for investors, the report details ongoing litigation and regulatory matters concerning improper trading practices in its Nations Funds family, specifically "market timing" and "late trading" by Canary Capital Partners, LLC. Bank of America is cooperating with investigations by the New York Attorney General (NYAG) and the SEC, and has announced a series of remedial actions. Key actions include establishing a restitution fund for harmed shareholders, returning management fees, and committing to stricter policies to prevent services to clients engaged in prohibited market timing. The company has also appointed external leaders to conduct an independent review of its mutual fund practices and compliance systems. A $100 million charge to income was recognized in the third quarter of 2003 related to these matters, with the potential for further charges as the ultimate outcome remains uncertain. The filing also notes that numerous lawsuits have been filed against the company and its subsidiaries.
Key Highlights
- 1Bank of America adopted amended and restated Bylaws on September 24, 2003.
- 2The company is cooperating with investigations by the NYAG and SEC into alleged "market timing" and "late trading" in Nations Funds by Canary Capital Partners.
- 3A former Banc of America Securities employee is facing criminal and civil actions for allegedly facilitating late trading.
- 4Bank of America will establish a restitution fund for shareholders harmed by these trading practices.
- 5The company will return all fund management and advisory fees related to the Canary market timing agreement.
- 6An independent review of Bank of America's mutual fund policies, practices, and systems is being initiated by external leaders.
- 7Bank of America recognized a $100 million charge to income in Q3 2003 related to these litigation and regulatory matters, with potential for future charges.