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BofA to pay almost US$11m over SEC short-sale violations
[NEW YORK] Bank of America Corp agreed to pay almost $11 million to resolve US Securities and Exchange Commission claims that its Merrill Lynch unit used inaccurate data when executing certain short-sale orders.
The brokerage used "easy-to-borrow" lists with out-of- date information about stocks that its customers wanted to bet against, the SEC said in an administrative order on Monday. Brokerages are required under securities laws to carry out short sales only on stocks that can be located and borrowed quickly.
"When firm personnel determine that a security should no longer be considered easy to borrow, the firm's systems need to incorporate that knowledge immediately," Andrew Calamari, head of the SEC's regional office in New York, said in a statement.
Bank of America admitted wrongdoing and agreed to retain an independent compliance consultant to review the firm's policies for accepting short-sale orders. The firm agreed to pay a US$9 million penalty, US$1.6 million in disgorgement and about US$335,000 in prejudgement interest.
"We have taken steps to improve our internal controls related to execution of short sales," Bill Halldin, a spokesman for Charlotte, North Carolina-based Bank of America, said in a statement.