The settlement calls for Bank of America to buy back $4.5B in ARS from retail customers, as well as small business and charities with account sizes below $10 million and $25 million respectively. Like other recent ARS settlements, this settlement includes provisions for the bank to reimburse retail investors who sold their ARS at a loss after the market collapsed, consent to special arbitration for consequential damages suffered by investors unable to liquidate funds, and work with issuers and “other interested parties” in order to “provide liquidity solutions for institutional customers.” Additionally, the settlement calls for Bank of America to refund financing fees it received from municipal issuers that issued ARS in the primary market between August 1, 2007 and February 11, 2008 and refinanced those securities through Bank of America after the ARS market encountered problems.
The Bank of America press release did not mention any fines or penalties, and the Massachusetts Securities Division has not yet made a full announcement of the terms of the settlement. Bank of America did, however, explicitly state that it is continuing to cooperate with the ongoing investigations by the New York Attorney General and the Securities and Exchange Commission.