Securities and Exchange Commission v. Bank of America, N.A. et al
Filing
52
FINAL JUDGMENT in favor of Securities and Exchange Commission against Banc of America Mortgage Securities, inc.. Signed by District Judge Max O. Cogburn, Jr on 11/25/2014. (eef)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
:
SECURITIES AND EXCHANGE
:
COMMISSION,
:
:
Plaintiff, : Civil Action No. 3:13-cv-447
v.
:
:
:
BANK OF AMERICA, N.A., BANC OF
:
AMERICA MORTGAGE SECURITIES, :
INC., and MERRILL LYNCH, PIERCE, :
FENNER & SMITH INC. f/k/a BANC
:
OF AMERICA SECURITIES LLC,
:
:
Defendants. :
:
:
FINAL JUDGMENT AS TO BANC OF AMERICA MORTGAGE SECURITIES, INC.
The Securities and Exchange Commission having filed a Complaint and Defendant Banc
of America Mortgage Securities, Inc. having entered a general appearance; consented to the
Court’s jurisdiction over Defendant and the subject matter of this action; consented to entry of
this Final Judgment; without admitting or denying the allegations of the Complaint (except as to
jurisdiction); waived findings of fact and conclusions of law; and waived any right to appeal
from this Final Judgment:
I.
IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendant and
Defendant’s agents, servants, employees, attorneys, and all persons in active concert or
participation with them who receive actual notice of this Final Judgment by personal service or
otherwise are permanently restrained and enjoined from violating Section 17(a)(2) and (a)(3) of
the Securities Act of 1933 (the “Securities Act”) [15 U.S.C. §§ 77q(a)(2) & (a)(3)] in the offer or
sale of any security by the use of any means or instruments of transportation or communication
in interstate commerce or by use of the mails, directly or indirectly:
(a)
to obtain money or property by means of any untrue statement of a material fact
or any omission of a material fact necessary in order to make the statements
made, in light of the circumstances under which they were made, not misleading;
or
(b)
to engage in any transaction, practice, or course of business which operates or
would operate as a fraud or deceit upon the purchaser.
II.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant
and Defendant’s agents, servants, employees, attorneys, and all persons in active concert or
participation with them who receive actual notice of this Final Judgment by personal service or
otherwise are permanently restrained and enjoined from violating Section 5(b)(1) of the
Securities Act [15 U.S.C. § 77e(b)(1)] by, directly or indirectly, in the absence of any applicable
exemption, making use of any means or instruments of transportation or communication in
interstate commerce or of the mails to carry or transmit any prospectus relating to any security
with respect to which a registration statement has been filed under 15 U.S.C. §§ 77a, et seq.,
unless such prospectus meets the requirements of 15 U.S.C. § 77j.
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III.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant
is jointly and severally liable together with defendants Bank of America, N.A., and Merrill
Lynch, Pierce, Fenner & Smith Inc. f/k/a Banc of America Securities LLC, for disgorgement of
$109,220,000, representing profits gained as a result of the conduct alleged in the Complaint,
together with prejudgment interest thereon in the amount of $6,620,000, and a civil penalty in the
amount of $109,220,000 pursuant to Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)].
Defendant’s foregoing obligations for disgorgement, prejudgment interest, and a civil penalty
shall be deemed satisfied in full by the payment of Bank of America Corp. to the United States
Department of Justice in accordance with the terms of the agreement dated August 20, 2014
among Bank of America Corp., the United States Department of Justice, and certain States. By
making this payment, Defendant relinquishes all legal and equitable right, title, and interest in
such funds and no part of the funds shall be returned to Defendant.
The Commission shall hold the funds, together with any interest and income earned
thereon (collectively, the “Fund”), pending further order of the Court. The Commission may
propose a plan to distribute the Fund subject to the Court’s approval. Such a plan may provide
that the Fund shall be distributed pursuant to the Fair Fund provisions of Section 308(a) of the
Sarbanes-Oxley Act of 2002. The Court shall retain jurisdiction over the administration of any
distribution of the Fund. If the Commission staff determines that the Fund will not be
distributed, the Commission shall send the funds paid pursuant to this Final Judgment to the
United States Treasury.
Regardless of whether any such Fair Fund distribution is made, amounts ordered to be
paid as civil penalties pursuant to this Judgment shall be treated as penalties paid to the
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government for all purposes, including all tax purposes. To preserve the deterrent effect of the
civil penalty, Defendant shall not, after offset or reduction of any award of compensatory
damages in any Related Investor Action based on Defendant’s payment of disgorgement in this
action, argue that it is entitled to, nor shall it further benefit by, offset or reduction of such
compensatory damages award by the amount of any part of Defendant’s payment of a civil
penalty in this action (“Penalty Offset”). If the court in any Related Investor Action grants such
a Penalty Offset, Defendant shall, within 30 days after entry of a final order granting the Penalty
Offset, notify the Commission’s counsel in this action and pay the amount of the Penalty Offset
to the United States Treasury or to a Fair Fund, as the Commission directs. Such a payment shall
not be deemed an additional civil penalty and shall not be deemed to change the amount of the
civil penalty imposed in this Judgment. For purposes of this paragraph, a “Related Investor
Action” means a private damages action brought against Defendant by or on behalf of one or
more investors based on substantially the same facts as alleged in the Complaint in this action.
IV.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this Court shall retain
jurisdiction of this matter for the purposes of enforcing the terms of this Final Judgment.
Signed: November 25, 2014
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