State regulators are investigating whether Bank of America Corp. trumped up the value of securities it marketed to investors in 2007 that ultimately cost investors $150 million in losses.
Massachusetts Secretary of State William F. Galvin said today that he has issued a subpoena to a unit of bank, Banc of America Securities LLC, for documents on two sets of collateralized loan obligations -- business loans from that are pooled together to sell to investors -- LCM VII Ltd. and Bryn Mawr CLO II.
Galvin said in a statement that his office is looking into whether the Charlotte-based bank knowingly overvalued the loans in the portfolio “to get them off their books and onto investors.”
“The question is what did the issuers know at the time of the sales and were the assets being priced truthfully,” Galvin said.
Bank of America, one of the nation’s biggest banks and the largest in Massachusetts, said it plans to cooperate with Galvin’s office.Todd Wallack can be reached at firstname.lastname@example.org.