Bank of America, RBC settle auction-rate securities cases

WASHINGTON -- The regulators also announced similar settlements with RBC Capital Markets, which agreed to buy back about $850 million worth of auction-rate securities from roughly 2,200 investors.

The Securities and Exchange Commission, New York Attorney General Andrew Cuomo and a group representing other state regulators announced the settlements with Bank of America, which joins nine other big investment banks that have agreed to buy back a total of more than $50 billion of the securities.

Bank of America also agreed to "use its best efforts" to provide as much as $5 billion in cash to other businesses that bought them. The bank is paying a $50 million civil penalty. It neither admitted or denied wrongdoing under the settlements.

The SEC's settlements with Bank of America and RBC are preliminary, subject to review and approval by the agency's commissioners.

The agreements with Bank of America, which had been expected, closely mirror an accord reached last month with the Massachusetts Securities Division that the bank began implementing on Oct. 1. The settlements announced Wednesday broaden the securities buybacks under the accord to investors nationwide.

In a statement, the Charlotte-based bank said it "continues to cooperate fully with the SEC's ongoing investigation."

The bank said its settlement offer "will provide liquidity to individual investors, and certain businesses and charitable organizations that have been affected by unprecedented conditions in the global credit markets."

RBC Capital Markets, the investment banking arm of Royal Bank of Canada, also neither admitted or denied wrongdoing. It said the buyback would cut into its fourth-quarter earnings by about $30 million on a pretax basis. That estimated loss includes the $9.8 million civil penalty the company agreed to pay to Cuomo's office and the North American Securities Administrators Association, which represents securities regulators in the 50 states and the District of Columbia.