Bank of America
on Wednesday said it had reached an agreement with the Massachusetts Securities Division to buy back $4.5 billion in auction-rate securities from retail customers, the latest settlement in a wide-ranging state and federal probe.
BofA will buy back the securities from investors who purchased them after Feb. 11, when the market froze up. Regulators allege that many banks misrepresented the securities -- debt instruments whose interest rates are set in regular auctions -- in their marketing materials as safe, cash-like investments, but the market became illiquid after auctions failed in February. The deal affects 5,500 customers, BofA said.
The Charlotte, N.C., bank said it would continue to cooperate with ongoing probes by New York Attorney General Andrew Cuomo and the
Securities and Exchange Commission
. BofA said it informed both parties of Wednesday's deal with Massachusetts.
BofA, like companies to settle before it, did not acknowledge any wrongdoing.
reached settlements last month.
BofA shares recently were down 1.5% to $32.02.
This article was written by a staff member of TheStreet.com.