NEW YORK — Massachusetts' securities regulator on Friday subpoenaed Bank of America Corp. in connection with its involvement in two loan securities that resulted in $150 million in losses for investors.
William Galvin, the Secretary of the Commonwealth, is examining whether Bank of America knowingly overvalued the assets in the portfolios in order to get the loans off its books, according to a statement on Friday.
A Bank of America spokesman wasn't immediately available.
The subpoenas cover documents and records from Banc of America Securities LLC regarding two collateralized loan obligations, LCM VII Ltd. and Bryn Mawr CLO II Ltd., which were structured and sold in 2007. Bank of America Securities merged with Merrill Lynch after its acquisition in 2008.
Bank of America bought $400 million of commercial loans in 2006 and 2007 to be packaged into securities and sold to investors, according to an attorney representing a Nevada investor who earlier this month won a $1.4 million arbitration award against Merrill.
The loans lost 5% of their market value in July 2007 while the bank was holding them, the attorney said.
