Bank of America Corp (NYSE: BAC) admitted that it had wrongly classified as much as $10.7 billion worth of short-term repurchase and lending transactions between 2007 and 2009 which reduced its end-of-quarter assets, according to a report from Business Week.
The Charlotte-based bank said that the inaccuracies ar neot material and “don’t stem from any intentional misstatement of the Corporation’s financial statements and was not related to any fraud or deliberate error,” according to a May 13 letter released yesterday from the SEC.
Cornelius Hurley, director of the Morin Center for Banking and Financial Law at Boston University School of Law told Business Week that “A $10.7 billion accounting error would be a material event for about 99.9 percent. It’s hard to see how the SEC can accept BofA’s rejoinder as being sufficient.”
Bank of America Corp (NYSE: BAC) admitted in a March 31 financial filing that “certain sales of agency mortgage-backed securities should have been recorded as secured borrowings rather than sales,” said bank spokesman Jerry Dubrowski “The handful of transactions did not have a material impact on the company’s balance sheet or earnings. They need to be viewed in the context of our $2.3 trillion balance sheet.”
In April, the SEC asked Bank of America to disclose whether its transactions were intentionally mislabeled, and to prove that the trades were immaterial. The Charlotte, North Carolina- based bank said in an April 13 letter that it stopped the transactions after the first quarter of 2009, the SEC said.