SEC Announces Fair Fund Distribution In Banc Of America Settlement

by Mike Godfrey, for LawAndTax-News.com, Washington

26 June 2008

The Securities and Exchange Commission (SEC) announced on Monday the distribution of approximately USD26.6mn to more than 250 investors in the Banc of America Securities LLC (BAS) settlement.

In March 2007, BAS paid USD26mn in disgorgement and penalties to settle SEC charges that the firm published false research on three companies, and failed to safeguard its nonpublic research information.

"We are happy to say that through the Fair Fund, we are able to pay BAS customers who purchased Intel, TelCom or E-Stamp stock during the relevant period 100 percent of their actual losses," commented Antonia Chion, Associate Director of the SEC's Division of Enforcement, adding that:

"We also are pleased that, as the plan provided, we were able to recompense some additional losses suffered by BAS customers."

The Fair Fund provisions of the Sarbanes-Oxley Act of 2002 provided the SEC with new authority to distribute financial penalties paid by securities law violators directly to injured investors.

Using this authority, the SEC already has distributed more than USD3.9bn in Fair Funds. Earlier this year, the SEC created a new office to further expedite Fair Fund distributions to harmed investors.

"The fact that the Commission was able to distribute more than USD26mn to injured investors a little more than a year from the date that the BAS Fair Fund was created demonstrates the staff's commitment to assisting injured investors as quickly as possible," explained Dick D'Anna, Director of the SEC's Office of Collections and Distributions, going on to add that:

"We look forward to distributing more Fair Funds in the future as we continue enhancing our commitment to recovering ill-gotten gains from wrongdoers and returning the money to investors."

In March 2007, the SEC brought settled administrative and cease-and-desist proceedings against BAS, charging that BAS published false research on three companies and failed to safeguard its nonpublic research information. BAS consented to the Commission's Order without admitting or denying the SEC's findings.

In addition to paying USD26mn in disgorgement and civil penalties, BAS agreed to retain an independent consultant to review the firm's internal controls; and agreed to certify that it had implemented structural and other reforms of its banking and research departments.

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