Magazine article American Banker

B of A to Repay Mutual Fund Clients

Magazine article American Banker

B of A to Repay Mutual Fund Clients

Article excerpt

Bank of America Corp. said Monday that it will make restitution to customers of its Nations Funds mutual funds for money they may have lost when it allowed a New Jersey hedge fund to conduct allegedly illegal or improper trades.

It also said it plans to hire an outside firm to determine what if anything its fund holders may have lost because of its arrangement with Canary Capital Partners LLC of Secaucus and that it would repay management fees it collected from Canary.

A spokesman declined to specify the amounts to be repaid. He also said Bank of America had yet to hire anyone to conduct the review of the $134 billion-asset Nations Funds. Analysts, lawyers, and other financial industry insiders on Monday said the company would probably hire a major auditing firm or law firm or both for the independent review.

An internal investigation is ongoing and the company has not yet taken any action against employees involved. And B of A has said it continues to cooperate with regulators.

"I took today's news as a big positive," said John Kline, an analyst at Sandler O'Neill & Partners LP. "They're going to make investors whole, based on this independent investigation."

Monday's actions came as B of A continued damage control that began last Wednesday after New York Attorney General Eliot Spitzer mentioned the Charlotte company in announcing a broad investigation into financial abuses at the nation's hedge and mutual funds.

Bank of America was among four mutual fund firms named in a complaint that Mr. …

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