Here’s Why Bank of America is Back in Front of the Firing Squad
Bank of America (NYSE:BAC) finds itself in federal court once more.
And once again, the United States’ second largest bank is accused of misrepresenting the quality of residential mortgage-backed securities.
Royal Park Investments sued Bank of America in New York state court on October 26, alleging that it had lost approximately $1.6 billion on the securities, which were initially purchased by a third-party. The investment firm was established in Brussels in May 2009 by the Belgian state, Fortis Bank, and BNP Paribas (BNPQY.PK) in order to manage a pool of distressed-debt securities.
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In the complaint, Royal Park said that Bank of America had made “false and misleading” statements regarding the quality of the loans underlying the investments.
For its losses, the investment firm seeks damages of more than $713 million.
As mortgage-backed securities were a central part of the most recent financial crisis, Bank of America’s Chief Executive Officer Brian Moynihan has spent more than $40 billion to manage defective mortgages and improper foreclosures since his tenure began in 2010. But the lawsuits keep mounting. Already, the company has settled three foreign suits, according to filings with the Securities and Exchange Commission.
Regarding its investment losses, Royal Park has pursued other claims in addition to the one filed against Bank of America. In July, the firm sued Bank of America’s Merrill Lynch unit, JPMorgan Chase (NYSE:JPM), Goldman Sachs (NYSE:GS) Credit Suisse (NYSE:CS), and Deutsche Bank (NYSE:DB) over losses on mortgage-backed securities.
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