A $10 million settlement between Bank of America ( BAC) and the SEC is pretty harsh medicine, but it does little to resolve the ongoing investigation of stock trading at the bank's securities unit.

The Securities and Exchange Commission said Wednesday that Bank of America will fork over $10 million to settle allegations that it tried to impede the SEC probe, which centers on whether the bank traded on its own research.

The bank, which also agreed to a censure, was cited under an enforcement action for breaking record-keeping and access provisions of the securities laws. The fine is the biggest ever imposed by the Securities and Exchange Commission in such a case, and it is meant to deliver a message to Wall Street about the danger of getting in the way of federal agents.

"Today's action makes clear that we will not tolerate unreasonable delay inresponding to our inquiries, and will act aggressively to protect the integrity of the commission's investigative processes," said Stephen Cutler, the SEC's director of enforcement.

But the penalty paid by the bank for foot-dragging may be just the start of BofA's problems. The SEC continues to investigate allegations that as many as seven former senior managers at Banc of America Securities, including a former marketing director, made stock trades in advance of soon-to-be released rating changes by the firm's equity analysts. TheStreet.com was the first to report that the underlying SEC probe concerned possible allegations of front-running.

An administrative order filed by the SEC as part of its settlement sheds more light on the allegations being investigated.

In the summer of 2001, the document shows, the SEC received an anonymous letter containing allegations that senior managers in the bank's securities division "may have caused the firm to purchase or sell securities in the firm's proprietary accounts knowing such securities would be the subject of forthcoming upgrades, downgrades or other market-moving research reports by the firm's equity research department." Sources said regulators subsequently discovered that some of those bank employees also may have traded stocks for their own personal gain.

A copy of that letter also was sent to the bank, a move the SEC says may have tipped BofA officials to the possibility of a probe.

The SEC contends the bank took nearly two years to comply with it requests for emails and other information. Regulators said Bank of America didn't fully comply with the document request until this past fall.

A bank spokeswoman declined to comment on the front-running allegations. In a prepared statement, the bank said it takes the alleged books and records violations seriously and has "put in place a number of measures designed to improve its ability to respond to this and other regulatory inquiries."

To date, according to the order, much of the investigation has focused on the activities of a former marketing director for the bank's securities division and a New York attorney, who used to be a partner in Solomon Zauderer Ellenhorn Frischer & Sharp. That law firm closed its door last year.

In the order, the SEC said some of the material it had trouble obtaining were "compliance and supervision documents concerning the personal trading activities of BAS' former director of marketing." The order also points a finger at the bank's outside attorney for some of the delays.

The marketing director, whose identity could not be determined, was quizzed by SEC attorneys in October 2002.

The SEC alleges that it was only after the bank hired a new outside lawyer that it began complying with the requests. The documents, many of which were not turned over to the SEC until last November, revealed the bank's compliance division had been conducting its own inquiry into "suspicious trading" by the former marketing director and others.

Scott Friestad, an SEC assistant director, said he could not comment on the ongoing investigation.

In afternoon trading, shares of BofA were recently down 72 cents, or 0.9%, to $81.05.

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