Bank of America to pay $9.8M to reimburse California ARS investors

Bank of America Corp of Charlotte, N.C. has joined the ever-growing list of firms that are being required to repay investors who bought auction rate securities. Yesterday, the California Department of Corporations announced a $9.8 million settlement with Banc of America Securities LLC and Banc of America Investment Services Inc., the company’s investment banking and securities broker-dealer arms, that ends the department’s investigation into charges BofA misrepresented the securities to investors. Sold a safe cash equivalent product, the products failed after the market froze in February 2008, and firms have been reimbursing suffering investors ever since. As part of the settlement, Bank of America has made repurchase offers to all individuals, small businesses and charitable institutions in California that bought securities from it, the Department of Corporations said in a statement. In addition, the bank is required to pay administrative penalties to California and agree to refrain from violations of California's securities law, the statement said. The repurchase offers apply to investors who bought the securities before Feb. 13, 2008. In total, the bank owes $50 million to investors in several different states. The $9.8 million that California investors are receiving from BofA is only a part of the $3 billion in outstanding ARS sold to Californians by firms such as Merrill Lynch & Co. Inc. and UBS Financial Services Inc., both headquartered in New York.