Bank of America to pay $42 million in electronic trade “masking” case.
Bank of America (BofA) will pay $42 million after defrauding its own clients. BofA did this by pretending to route clients’ stocks within the company. Yet, clients’ stocks were actually being rerouted to outside firms.
The crime took place between 2008 and 2013. BofA admits to having undisclosed agreements or agreements that were not made public. These agreements were made with outside firms. Even though the agreements concerned clients’ stocks, clients were unaware of their existence.
BofA made it look like the routing was internal, when instead it was routing the stocks to outside firms. This was done by altering trade confirmations. The bank lied to their clients about what was actually going on. The confirmations never said anything about outside firms partaking in the clients’ stocks. BofA did this to make their “trading services appear safer and more sophisticated than they were” according to Reuters. This is why the bank masked its fraudulent activity with altered trade confirmations.
This whole scheme affected more than 16 million trade orders and 4 billion shares. New York Attorney General Eric Schneiderman announced the $42 million settlement in March of 2018. He said BofA “went to astonishing lengths to defraud its own institutional clients about who was seeing and filling their orders.”