US sues Bank of America for alleged fraud

City A.M. Reporter
THE US government yesterday filed two civil suits against the Bank of America for an alleged fraud against investors, involving $850m (£553.5m) of mortgage-backed securities.

The Justice Department and the US Securities and Exchange Commission filed the parallel suits in US district court in Charlotte, according to the court filings.

The securities date to about January 2008, the government said, putting them just at the beginning of the global financial crisis.

The two suits accuse Bank of America of making misleading statements and failing to disclose important facts about the mortgages underlying a securitisation named BOAMS 2008-A.

Bank of America responded to the lawsuits with a statement: “These were prime mortgages sold to sophisticated investors who had ample access to the underlying data, and we will demonstrate that”. They added: “We are not responsible for the housing market collapse that caused mortgage loans to default at unprecedented rates and these securities to lose value as a result”.

Bank of America has previously announced settlements with investors and the US government.