Bank of America Corp. today agreed to settle charges by the SEC that it failed to properly disclose and account for its investment in D.E. Shaw & Co. LP, a brokerage firm that incurred huge losses in trading derivatives in the late 1990s. The Charlotte, N.C.-based bank agreed to settle the charges without admitting to any wrongdoing on its part.
The SEC charged that Bank of America did not properly disclose these losses and their risk in its financial statements. The agency also found that while the bank disclosed the advantage of its investment in D.E. Shaw in 1997 and 1998 in its financial statements, it failed to disclose the effect of the Asian financial crisis — and the resulting losses by D.E. Shaw — in the fall of 1998 that caused Bank of America to incur a $372 million writedown as of Sept. 30, 1998.
