BOA gets its auction rate comeuppance

The auction rate securities lawsuit bonanza is the gift that keeps giving for litigation attorneys. Bank Of America is the latest bank to be caught up in this dance.

Bank of America Corp., the largest U.S. commercial bank, said Thursday that it has received subpoenas and requests for information from federal and state government agencies over auction-rate securities.

The Charlotte, North Carolina-based bank also said it has received subpoenas, interrogatories or civil investigative demands from a number of state attorneys general regarding municipal derivatives transactions from 1992 to the present.
–National Post, 7 Aug 2008

Notice the date on the documents subpoenaed: from 1992 to the present. Obviously, this is not just a legitimate lawsuit against BOA on the issue at hand. It is a fishing expedition in order to determine whether any other unsavory activities might have existed in the last 16 years.

On the back of the Citi settlement in the auction rate securities debacle, this can only be seen as upping the ante against the securities industry. Financial institutions of all stripes should be now officially on notice: the government will get its pound of flesh.