Bank of America Corp. swayed a judge to rethink his tentative opinion that a U.S. Securities and Exchange Commission lawsuit over the issuance of $850 million in mortgage-backed securities should go forward, Bloomberg News reported yesterday. The SEC claims that the lender failed to file documents with the regulator that it gave potential investors in the securities, which later plummeted in value, obscuring the fact the buyers got false information. At a hearing yesterday in federal court in Asheville, North Carolina, lawyers for the bank argued that SEC rules governing such disclosures were unclear. The bank “certainly made some points,” said U.S. District Judge Max O. Cogburn Jr. Cogburn told the lawyers that before the hearing he’d “been leaning toward” adopting a magistrate judge’s recommendation that the SEC’s case go forward, but that now he’d take “a look back.” The SEC suit and a parallel case by the U.S. Justice Department over the same securities are part of a government bid to punish companies for actions the U.S. says helped trigger the financial collapse. The hearing comes as the Justice Department broke off negotiations with Bank of America earlier this week because it was dissatisfied with the lender’s offer to pay more than $12 billion to resolve separate government probes of the lender’s sale of mortgage-backed bonds before the crisis.
