Bank of America Corp. should face U.S. Securities and Exchange Commission claims over $855 million in mortgage-backed securities, said a judge who last week advised that a Justice Department complaint over the same securities should be thrown out, Bloomberg News reported today. U.S. Magistrate Judge David Cayer in Charlotte, N.C., recommended yesterday that Bank of America’s request to dismiss the SEC case be denied. The complaint adequately alleged the bank didn’t disclose in offering documents for the securities that the bulk of the mortgages pooled in them were bought wholesale from third-party brokers, he said. Judge Cayer said in a March 27 recommendation that the Justice Department’s lawsuit seeking to hold Bank of America liable under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) should be thrown out. The 1989 law with a 10-year statute of limitations has become a tool for federal prosecutors bringing civil claims for alleged wrongdoing in the buildup to the 2008 financial crisis. The magistrate judge’s findings in both cases will be reviewed by U.S. District Judge Max O. Cogburn Jr. The bank or the government can then appeal any order by Cogburn.
