Galvin Goes After Phony Investment Claims
Secretary of the Commonwealth William Galvin has charged Banc of America Investment Services Inc. with misleading an investor in order to keep his $2 million in assets with BAI.
In a statement, Galvin said two BAI employees based in Hingham sold an investor Fannie Mae and Freddie Mac agency step-up bonds while portraying them as being guaranteed by the U.S. government.
Step-up bonds are debt securities with interest rates that increase over time. The investor was considering moving his $2 million out of a BAI certificate of deposit because its interest rate had fallen.
Galvin argues that the BAI employees' presentation to the investor violated BAI policies, but was nonetheless praised by BAI for keeping the $2 million investment in house.
Galvin said the case highlights the risks involved in merging retail banking and affiliated brokerages willing to undermine bank rules in order to keep assets on the books.
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