BofA Gets Green Light To Continue Hedge-Fund Sales

Nov 26 2014 | 12:25pm ET

Bank of America’s mortgage-bond settlement won’t keep it from selling hedge funds to clients.

The Securities and Exchange Commission has granted the bank a 30-month waiver on restrictions on selling private offerings. Such limits are imposed automatically under the regulator’s new “bad actor” rule, adopted last year. BofA’s ban is set to last for 60 months; the firm will have to seek a new waiver when the first one expires.

In exchange, BofA has agreed to appoint an independent compliance consultant and give that person access to its files, books, records and employees. The consultant must submit a preliminary report to the SEC next year.

BofA is nearing a $16.7 billion global mortgage settlement. In addition to the temporary hedge-fund sales waiver, the SEC granted the bank a full waiver that will allow it to continue managing mutual funds. It refused to grant a waiver allowing BofA to freely raise capital without SEC approval.

The BofA waiver follows a similar SEC move for Citigroup in August. Citi had to stop selling hedge funds to clients after its $285 million mortage-backed securities settlement earlier that month.


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