Eight Bank of America Corp. executives were subpoenaed by New York Attorney General Andrew Cuomo, adding pressure on the bank to settle a probe of auction-rate securities, said a person familiar with negotiations.
Cuomo's office sent the subpoenas yesterday and today, the person said. Bank of America also must settle with Massachusetts or face legal action, Secretary of State William Galvin said yesterday.
UBS AG, Citigroup Inc., Morgan Stanley, JPMorgan Chase & Co., Wachovia Corp., Merrill Lynch & Co., Goldman Sachs Group Inc. and Deutsche Bank AG all settled claims in the last month that they fraudulently marketed the long-term securities as cash equivalents. The $330 billion market collapsed in February, leaving thousands of investors unable to sell auction-rate securities.
"We don't comment on whether we receive subpoenas or not," Bank of America spokeswoman Shirley Norton said today. She has said the bank is cooperating with regulators and doesn't comment on communications with them.
Reuters reported earlier today that Cuomo was issuing subpoenas to "several" Bank of America executives as part of his probe of auction-rate securities.
Galvin, leading a 12-state task force in the Bank of America investigation, said yesterday his office has been unable to complete a settlement after negotiating with the Charlotte, North Carolina-based bank. Cuomo has said he, too, seeks an agreement with the bank, one of the largest underwriters of auction-rate securities.
The eight banks that settled agreed to buy back a total of at least $44 billion of the securities from individuals, nonprofits and small businesses and help their institutional clients find markets for the debt. They also agreed to pay fines totaling more than $520 million to state and federal regulators.