BofA Securities Settles DoJ Probe Into Alleged Market Manipulation by Former Employees

Bank of America Securities recently came to an agreement to resolve an investigation conducted by the U.S. Department of Justice (DoJ) regarding two former employees involved in manipulating the “cash” market at its U.S. Treasury desk. This scheme took place between November 2014 and April 2020. The employees were found to have placed over one thousand suspected spoof orders, which were orders that were placed without the intention of executing them at the time. Moreover, one of the employees involved also manipulated the futures market for U.S. Treasuries by entering spoof orders.

In settling this matter, the Justice Department decided not to prosecute Bank of America Securities. However, the bank will have to disgorge approximately $1.96 million and allocate around $3.6 million to a victim compensation fund that it will establish and oversee. The Department praised Bank of America Securities for its voluntary disclosure of the misconduct and its proactive cooperation during the investigation.

This is not the first time that Bank of America has faced penalties for this issue. In 2023, the Financial Industry Regulatory Authority (FINRA) imposed a fine of $24 million on Bank of America for similar violations. Despite these challenges, the stock showed a 1.4% increase on Thursday and rose by 0.2% in extended trading.

Retail investor sentiment on Stocktwits regarding Bank of America was positive at the time of this report, indicating bullish sentiment from the community.

In an interview with Bloomberg TV, Bank of America CEO Brian Moynihan confirmed that he has no immediate plans to leave the company. However, he mentioned the necessity for the management to prepare a pool of candidates who could potentially lead the company in the future. The stock of Bank of America has surged by 18.1% this year, benefiting from a supportive regulatory climate for major U.S. banks and increased activity in investment banking.

In other news, Goldman Sachs raised its price target on Tesla, with an analyst projecting a higher estimate for Tesla’s Q3 deliveries compared to market consensus. This development indicates a positive outlook for Tesla as it continues to impress investors.

Overall, despite regulatory challenges and investigations, Bank of America’s stock performance remains resilient, reflecting the company’s efforts to address past issues and position itself for a successful future. Investors and analysts will be closely monitoring Bank of America’s progress and strategic decisions in the coming months.

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