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Bank of America accused of misleading investors

Federal prosecutors announced a civil lawsuit Tuesday against Bank of America for allegedly failing to disclose risks and misleading investors in an of $850 million mortgage-bond deal offered in 2008. The action filed in North Carolina also targeted Bank of America affiliates Merrill Lynch, Pierce, Fenner & Smith and Bank of Bank of America Mortgages Securities. In a related lawsuit also filed there, the Securities and Exchange Commission alleged that more than 70% of the mortgages in the Bank of America offering originated with brokers unaffiliated with the giant bank. Both lawsuits focused on residential mortgage-backed securities — bonds backed by a pool of residential mortgage loans packaged together at varying levels of risk and sold to investors. Separately Tuesday, Swiss banking giant UBS agreed to pay nearly $50 million to settle allegations that it misled investors in a 2007 mortgage-bond deal that went bad as the U.S. real estate market imploded. The SEC said Switzerland's largest bank agreed to the settlement after the bank kept $23.6 million in upfront payments it received while acquiring collateral for the deal without investors' knowledge. UBS agreed to the settlement without admitting or denying SEC allegations that the bank had violated U.S. securities laws.

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